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	$ 468,000	100%	$ 156,000	100%	$ 312,000	100%
Variable expenses	234,000	50%	46,800	30%	187,200	60%
Contribution margin	234,000	50%	109,200	70%	124,800	40%
Traceable fixed expenses	131,040	28%	81,120	52%	49,920	16%
Office segment margin	102,960	22%	$ 28,080	18%	$ 74,880	24%
Common fixed expenses not traceable to offices	65,520	14%
Net operating income	$ 37,440	8%

Brewer 9e Rechecks 2021-11-15

Required:

1a. Compute the companywide break-even point in dollar sales.

Break-even point in dollar sales

?#

1b. Compute the break-even point for the Chicago office and for the Minneapolis office.

	Break-even point
Chicago office	?#
Minneapolis office	?#

1c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

GREATER THAN

1d. By how much would the companys net operating income increase if Minneapolis increased its sales by $78,000 per year? Assume no change in cost behavior patterns.

Net operating income increase

?#

1e. Assume that sales in Chicago increase by $52,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

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.))

	Total	Company	Chic-	-ago	Minne-	-apolis
	Amount	%	Amount	%	Amount	%
Sales	?#	?#	?#	?#	?#	?#
?#	?#	?#	?#	?#	?#	?#
Contribution margin	0	0.0	0	0.0	0	0.0
?#	?#	?#	?#	?#	?#	?#
Office segment margin	0	0.0	$0	0.0	$0	0.0
?#	?#	?#
Net operating income	$0	0.0