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Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis (L07-4, LO7-5) (The following information applies to the questions displayed below.) Raner, Harris & Chan
Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis (L07-4, LO7-5) (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 $ 975,000 100.08 526,500 54.08 448,500 46.08 218,400 22.4% 230,100 23.6% 156,000 16.08 $ 74,100 7.6% Office Chicago Minneapolis $ 195,000 100% $ 780,000 100% 58,500 30% 468,000 608 136,500 708 312,000 408 101,400 52% 117,000 15 $ 35, 100 188 $ 195,000 258 Exercise 7-16 Part 2 2. Assume that sales in Chicago increase by $65,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Exercise 7-16 Part 2 2. Assume that sales in Chicago increase by $65,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Segments Total Company Chicago Minneapolis Amount % Amount % Amount % 0 0.0 0 0.0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 $ 0 0.0
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