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: Sales, Variable expenses Office Total Company $ 490,500 100% 245,250 50% 245,250 508 137,340 28 107,910 228 68,670 14 Chicago $ 163,500 100% 49,050 30% 114,450 708 85,020 528 $ 29,430 188 Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income: $ 39,240 88 Minneapolis $ 327,000 100% 196,200 60% 130,800 408 52,320 16 $ 78,480 248 Exercise 7-17 (Algo) Working with a Segmented Income Statement [LO7-4] Assume that Minneapolis' sales by major market are: Market Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Minneapolis 5 327,000 100% 196,200 60% 130,800 40% 35,970 114 94,830 291 16,350 51 $ 78,480 24 1 Medical 5 218,000 100% 139,520 648 70,480 361 13,080 68 308 $ 65,400 Dental $ 109,000 100% 56,680 526 52,320 40% 22,890 211 $29,430 27 Market Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin: Common fixed expenses not traceable to offices Net operating income Minneapolis $ 327,000 100% 196,200 60% 130,800 408 35,970 118 94,830 298 16,350 51 $ 78,480 24 Medical $ 218,000 100% 139,520 648 78,480 368 13,080 68 $ 65,400 30% $ 109,000 Dental 100% 56,680 52 52,320 48% 22,890 219 $ 29,430 278 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,450. Marketing studies indicate that such a campaign would increase sales in the Medical market by $43,600 or increase sales in the Dental market by $38,150. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by Required 2