Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two officesone in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the companys most recent year is given below:

Sales$ 513,000100.00%$ 171,000100.00%$ 342,000100.00%Variable expenses256,50050.00%51,30030.00%205,20060.00%Contribution margin256,50050.00%119,70070.00%136,80040.00%Traceable fixed expenses143,64028.00%88,92052.00%54,72016.00%Office segment margin112,86022.00%$ 30,78018.00%$ 82,08024.00%Common fixed expenses not traceable to offices71,82014.00% Net operating income$ 41,0408.00%

3. Assume sales in Chicago increase by $57,000 next year and sales in Minneapolis and all fixed costs remain unchanged.

a. Prepare a new segmented income statement for the company.

Assume Minneapoliss sales by major market are:

	Minneapolis	Market
Medical	Dental
Sales	$ 342,000	100.00%	$ 228,000	100.00%	$ 114,000	100.00%
Variable expenses	205,200	60.00%	145,920	64.00%	59,280	52.00%
Contribution margin	136,800	40.00%	82,080	36.00%	54,720	48.00%
Traceable fixed expenses	37,620	11.00%	13,680	6.00%	23,940	21.00%
Market segment margin	99,180	29.00%	$ 68,400	30.00%	$ 30,780	27.00%
Common fixed expenses not traceable to markets	17,100	5.00%
Office segment margin	$ 82,080	24.00%

The company is planning a $5,700 advertising campaign next month in either the Medical or Dental market. Marketing studies indicate this campaign would increase Medical market sales by $45,600 or Dental market sales by $39,900

1. How much would the company's profits increase (decrease) if it advertised in the Medical market?
2. How much would the company's profits increase (decrease) if it advertised in the Dental market?
3. Should the company advertise in the Medical or Dental market?