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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 offices-one in Chicago
Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one 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 $ 531,000 Variable expenses 265,500 Total Company 100.00% 50.00% Chicago Minneapolis $177,000 53,100 100.00% $ 354,000 100.00% 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% Conmon fixed expenses not traceable to offices 74,340 14.00% Net operating income $ 42,480 8.00% ces 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $88,500 per year? Assume no change in cost behavior patterns. Net operating income increase
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