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Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5) The following information applies to the questions displayed below.] Raner, Harris & Chan
Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5) The following information applies to the questions displayed below.] Raner, Harris & 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 Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 562,500 100.0% 303,750 54.0% 258,750 46.08 126,000 22.4% 132,750 23.68 - 90,000 16.08 $ 42,750 7.6% office Chicago Minneapolis $ 112,500 100% $ 450,000 100% 33,750 308 270,000 60% 78,750 708 180,000 40% 58,500 52% 67,500 15% $ 20,250 188 $ 112,500 25% Exercise 6-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $56,250 per year? Assume no change in cost behavior patterns. Net operating income increase
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