D Required information [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Sales Chicago office Minneapolis $ 159,000 100.00% $318,000 Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating incone Total Company $477,000 238,500 100.00% 50.00% 100.00% 47,708 30.00% 190,000 60.00% 238,500 50.00% 111,300 70.00% 127,200 40.00% 133,560 28.00% 82,688 52.00% 58,800 16.00% 104,940 22.00% $ 28,620 18.00% $76,320 24.00% 66,788 $ 38,160 14.00% 8.00% Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to i markets Market Minneapolis Medical Dental $318,000 100.00% $ 212,000 100.00% $ 106,000 190,800 60.00% 135,650 64.00% 55,120 100.00% 52.00% 127,200 40.00% 76,320 36.00% 50,000 48.00% 34,900 11.00% 12,720 6.00% 22,260 21.00% 92,220 29.00% $63,600 30.00% 520,620 27.00% 15,900 5.00% 36 37 Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Office Total Company Chicago Minneapolis Sales $ 477,000 100.00% Variable expenses 238,500 50.00% $ 159,000 47,700 100.00% 30.00% $318,000 190,800 100.00% 60.00% Contribution margin 238,500 50.00% 111,300 70.00% Traceable fixed expenses 133,568 28.00% 82,680 52.88% 127,200 50,880 40.00% 16.00% Office segment margin 104,940 22.00% $ 28,620 18.00% $ 76,320 24.00% Common fixed expenses not traceable to offices 66,780 Net operating income $38,160 14.00% 8.00% By how much would the company's net operating income increase if Minneapolis increased its sales by $79,500 per year? Assume o change in cost behavior patterns. Net operating income increase Assume that Minneapolis' sales by major market are: Minneapolis Medical Sales Variable expenses Contribution margin 5 318,000 190,800 100.00% 60.00% Market Dental $212,000 100.00% 5 106,000 100.00% 135,680 64.00% 55,120 52.00% 127,200 40.00% 76,320 36.00% Traceable fixed expenses 50,880 48.00% 34,988 11.00% 12,720 Market segment margin 92,220 29.00% $ 63,600 6.00% 30.00% 22,260 21.00% $ 28,620 27.00% Common fixed expenses not traceable to markets Office segment margin 15,900 $ 76,320 5.00% 24.00% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,300. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,400 or increase sales in the Dental market by $37,100. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 11 Required 2 Required 31 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits Required 2 > Office segment margin $ 76,320 24.00% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The Campaign would cost $5,300. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,400 Or increase sales in the Dental market by $37,100. Required: How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 2 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by Required 2 > Office segment margin: $ 76,320 24.00% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,300. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,400 or increase sales in the Dental market by $37,100. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits Common Tixed expenses not traceable to markets Office segment margin 15,900 5.00% $ 76,320 24.00% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,300. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,400 or increase sales in the Dental market by $37,100. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 11 Required 2 Required 3 In which of the markets would you recommend that the company focus its advertising campaign? Medical Dental