Question
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
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 Total Company $508,500 Chicago Minneapolis Variable expenses 254,250 100.00% 50.00% $ 169,500 Contribution margin 254,250 50.00% Traceable fixed expenses 142,380 28.00% 50,850 118,650 88,140 100.00% 30.00% 70.00% $ 339,000 100.00% office segment margin 111,870 22.00 $ 30,510 52.00% 18.00% 203,400 135,600 54,240 60.00% 40.00% 16.00% $ 81,360 24.00 Common Eixed expenses not traceable to offices 71,190 Net operating income $40,680 14.00% 8.00% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $84,750 per year? Assume no change in cost behavior patterns.
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