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 Variable expenses Contribution margin Traceable fixed expenses Total Company $ 454,500 100% Chicago $151,500 Minneapolis 100% $ 303,000 227,250 50% 45,450 30% 100% 181,800 606 227,250 50% 127,260 281 99,990 229 63,630 149 106,050 70% 121,200 409 78,780 52 48,480 168 $27,270 184 $ 72,720 24 Office segment margin Common fixed expenses not traceable to offices Net operating income $ 36,360 84 Exercise 7-17 (Algo) Working with a Segmented Income Statement [LO7-4] Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Market Minneapolis $303,000 100% 191,800 60% 40% 121,200 Medical Dental 33,330 11 $ 202,000 129,200 649 72,720 369 12,120 6 100% $101,000 100% 52,520 524 40,400 40% 21,210 219 87,870 296 15,150 $72,720 24 \ $ 60,600 309 $27,270 276 Net operating income 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 $5,050. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,400 or increase sales in the Dental market by $35,350.