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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
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: Office Total Company Chicago Minneapolis Sales $ 522,000 Variable expenses 261,000 100.00% 50.00% Contribution margin 261,000 50.00% Traceable fixed expenses 146,160 28.00% $ 174,000 52,200 121,800 90,480 100.00% 30.00% $ 348,000 100.00% 208,800 60.00% Office segment margin 114,840 22.00% $ 31,320 70.00% 52.00% 18.00% 139,200 40.00% 55,680 16.00% $ 83,520 24.00% Common fixed expenses not traceable to offices 73,080 14.00% Net operating income $ 41,760 8.00% Exercise 6-16 Part 3 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 3. Assume sales in Chicago increase by $58,000 next year and sales in Minneapolis and all fixed costs remain unchanged. a. Prepare a new segmented income statement for the company. Note: Round your intermediate calculations and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.)
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