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 $ 531,000 100.00% $ 177,000 100.00% $ 354,000 100.00% Variable expenses 265,500 50.00% 53,100 30.00% 212,400 60.00% Contribution margin 265,500 50.00% 123,900 70.00% 141,600 40.00% Traceable fixed expenses 148,680 28.00% 92,040 52.00% 56,640 16.00% Office segment margin 116,820 22.00% $ 31,860 18.00% $ 84,960 24.00% Common fixed expenses not traceable to offices 74,340 14.00% Net operating income $ 42,480 8.00% 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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