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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 company's most recent year is given: Office Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 499,500 100% 249,750 50% 249,750 50% 139,860 28% 109,890 22% 69,930 14% Chicago $ 166,500 100% 49,950 30% Minneapolis $ 333,000 100% 199,800 60% 116,550 70% 86,580 52% 133,200 40% 53,280 16% $ 29,970 18% $ 79,920 24% $ 39,960 8% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $83,250 per year? Assume no change in cost behavior patterns. Net operating income increase
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