Problem 1: Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone 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 companys most recent year is given: Assume that Minneapolis sales by major market are: Market Minneapolis Medical Dental Sales $ 840,000 100 % $ 560,000 100 % $ 280,000 100 % Variable expenses 504,000 60 % 364,000 65 % 140,000 50 % Contribution margin 336,000 40 % 196,000 35 % 140,000 50 % Traceable fixed expenses 100,800 12 % 28,000 5 % 72,800 26 % Market segment margin 235,200 28 % $ 168,000 30 % $ 67,200 24 % Common fixed expenses not traceable to markets 25,200 3 % Office segment margin $ 210,000 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 $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?