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Exercise 6-17 Working with a Segmented Income Statement [LO6-4) Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has 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 givern: Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common tixed expenses $840,000 100% $560,000 100% $280,000 100% -504,000 -60. 364,000 658 140,000 50% 336,000 408 196,000 359 140,000 508 100,800 12 28,000 58 72,800 26 235,200 288 $168,000 30% $67,200 248 not traceable to markets office segment margin 25,200 $210,000 25 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. campaign would cost $11,200. Marketing studies indicate that such a campaign would increase sales in the Medical market by $98,000 or increase sales in the Dental market by $84,000. 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? Prev 1 of 3 1 Next >