Question
Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone in Chicago
Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone 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 companys most recent year is given:
| Total Company | Office | |||||
|---|---|---|---|---|---|---|
| Chicago | Minneapolis | |||||
| Sales | $ 459,000 | 100.00% | $ 153,000 | 100.00% | $ 306,000 | 100.00% |
| Variable expenses | 229,500 | 50.00% | 45,900 | 30.00% | 183,600 | 60.00% |
| Contribution margin | 229,500 | 50.00% | 107,100 | 70.00% | 122,400 | 40.00% |
| Traceable fixed expenses | 128,520 | 28.00% | 79,560 | 52.00% | 48,960 | 16.00% |
| Office segment margin | 100,980 | 22.00% | $ 27,540 | 18.00% | $ 73,440 | 24.00% |
| Common fixed expenses not traceable to offices | 64,260 | 14.00% | ||||
| Net operating income | $ 36,720 | 8.00% | ||||
3. Assume that sales in Chicago increase by $51,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.
a. Prepare a new segmented income statement for the company. (Round your intermediate calculations and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
