Exercise 6-17 Working with a Segmented Income Statement [L06-4] 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: Assume that Minneapolis' sales by major market are: Market Medical $780,000 100% $520,000 100% $260,000 1008 468,000 60% 338,000 65% 130,000 50 312,000 408 182,000 35% 130,000 50 Minneapolis Dental Sales Variable expenses Contribution margin Traceable fixed expenses Market seqment margin Common tixed expenses not traceable to markets Office seqment margin 93,600 129 26,000 51 67,600 26' 218,400 28 $156,000 30 62,400 24 23,4003 195,000 25 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 $10,400. Marketing studies indicate that such a campaign would increase sales in the Medical market by $91,000 or increase sales in the Dental market by $78,000. Required: 1. How much would the company's profts increase (decrease) fit 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. Prev 1 of 3Next