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Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and
Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one 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 company's most recent year is given below: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 517,500 258,750 258,750 144,900 113,850 72,450 $ 41,400 100.00% -50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 172,500 51,750 120, 750 89,700 $ 31,050 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 345,000 207,000 138,000 55,200 $ 82,800 100.00% 60.00% 40.00% 16.00% 24.00% Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
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