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Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago
Raner, Harris & 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 $1,087,500 Chicago $ 217,500 65,250 152,250 Minneapolis $ 870,000 522,000 348,000 100 Sales 100.08 100% Variable expenses 587,250 500,250 54.08 30% 60% Contribution margin Traceable fixed expenses 40 70% 46.08 22.48 528 158 243,600 113,100 130,500 $ 217,500 Office segment margin 23.6 18 $39,150 256,650 25% Common fixed expenses not traceable to offices 16.08 174,000 82,650 7.6% Net operating income 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? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answer to the nearest whole dollar amount.) Break-even point in dollar sales Req 1B Req 1A Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Compute the break-even point for the Chicago office and for the Minneapolis office. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.) Break-Even Point Chicago office Minneapolis office Req 1A Req 1C 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $108,750 per year? Assume no change in cost behavior patterns. Net operating income increase a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Segments Total Company Chicago Minneapolis Amount % Amount % Amount % 0 0.0 0.0 0 0.0 0.0 $ C 0.0 C 0.0 0 $ 0 0.0
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