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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
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 Total Company Chicago Sales $ 508,500. Variable expenses 254,250 100.00% 50.00% $ 169,500 100.00% 50,850 30.00% Minneapolis $339,000 203,400 100.00% 60.00% Contribution margin 254,250 50.00% 118,650 70.00% 135,600 40.00% Traceable fixed expenses 142,380 28.00% 88,140 52.00% 54,240 16.00% office segment margin 111,870 22.00% $ 30,510 18.00% $ 81,360 24.00% Common fixed expenses not traceable to offices 71,190 Net operating income 540,680 14.00% 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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