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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 Assume that Minneapolis' sales by major market are Market Minneapolis Medical Dental Sales $900,000 100% $600,000 100% $300,000 100% 150,000 50% Variable expenses 540,000 60% 390,000 65% 360,000 40% 210,000 35% 150,000 50% 78,000 26% Contribution margin 108,000 12% 30,000 5% Traceable fixed expenses Market segment margin Common fixed expenses 252,000 28% $180,000 30% $ 72,000 24% not traceable to markets 27,000 3% Office segment margin $225,000 25% 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 S12,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $105,000 or increase sales in the Dental market by $90,000 Required 1-a. Calculate the increased segment margin Medical Dental Increased segment margin
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