Question
Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone in Chicago
Raner, Harris and 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:
| Total Company | Office | |||||
|---|---|---|---|---|---|---|
| Chicago | Minneapolis | |||||
| Sales | $ 540,000 | 100.00% | $ 180,000 | 100.00% | $ 360,000 | 100.00% |
| Variable expenses | 270,000 | 50.00% | 54,000 | 30.00% | 216,000 | 60.00% |
| Contribution margin | 270,000 | 50.00% | 126,000 | 70.00% | 144,000 | 40.00% |
| Traceable fixed expenses | 151,200 | 28.00% | 93,600 | 52.00% | 57,600 | 16.00% |
| Office segment margin | 118,800 | 22.00% | $ 32,400 | 18.00% | $ 86,400 | 24.00% |
| Common fixed expenses not traceable to offices | 75,600 | 14.00% | ||||
| Net operating income | $ 43,200 | 8.00% | ||||
3. Assume that sales in Chicago increase by $60,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.
a. Prepare a new segmented income statement for the company. (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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Risk Based Tax Audits Approaches And Country Experiences
Authors: Munawer Sultan Khwaja, Rajul Awasthi, Jan Loeprick
1st Edition
0821387545, 978-0821387542
