Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $1,087,500 100.0% 587,250 54.94 500,250 46.8% 243,600 22.49 256,650 23.6 174,000 16.0% $ 82,650 7.6% Office Chicago Minneapolis $ 217,500 100 $ 870,000 1804 65,250 399 522,000 68% 152, 250 705 348,000 40% 113, 100 52% 130,500 15 $ 39, 150 184 $ 217,500 254 Exercise 7-16 Part 2 2. Assume that sales in Chicago increase by $72,500 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 percentage answers to 1 decimal place (ie. 0.1234 should be entered as 12.3).) Total Company Amount % Chicago Amount Segments Minneapolis Amount % Exercise 7-16 Part 2 2. Assume that sales in Chicago increase by $72,500 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 percentage answers to 1 decimal place (l.e. 0.1234 should be entered as 12.3).) Chicago Total Company Amount % Segments Minneapolis Amount Amount 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 Minneapol even points? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 10 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 Reg 1B > 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Systems Direct Auditing Practice Case IBM Book Workbook And 5.25 Disk

Authors: Dieter Weiss, Gaylord N. Smith

1st Edition

0538809051, 978-0538809054

More Books

Students also viewed these Accounting questions