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 | $ 504,000 | 100.00% | $ 168,000 | 100.00% | $ 336,000 | 100.00% |
| Variable expenses | 252,000 | 50.00% | 50,400 | 30.00% | 201,600 | 60.00% |
| Contribution margin | 252,000 | 50.00% | 117,600 | 70.00% | 134,400 | 40.00% |
| Traceable fixed expenses | 141,120 | 28.00% | 87,360 | 52.00% | 53,760 | 16.00% |
| Office segment margin | 110,880 | 22.00% | $ 30,240 | 18.00% | $ 80,640 | 24.00% |
| Common fixed expenses not traceable to offices | 70,560 | 14.00% | ||||
| Net operating income | $ 40,320 | 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?
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
Merchandising Math A Managerial Approach
Authors: Doris Kincade, Fay Gibson, Ginger Woodard
1st Edition
0130995886, 978-0130995889
