Raner, Harris, & 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 company's most recent year is given below:

			Office
	Total Company		Chicago		Minneapolis
Sales	$900,000	100%	$180,000	100%	$720,000	100%
Variable expenses	486,000	54%	54,000	30%	432,000	60%
Contribution margin	414,000	46%	126,000	70%	288,000	40%
Traceable fixed expenses	201,600	22%	93,600	52%	108,000	15%
Office segment margin	212,400	24%	$32,400	18%	$180,000	25%
Common fixed expenses not traceable to offices	144,000	16%
Net operating income	$68,400	8%

rev: 02-18-2011

4.

Requirement 1:

By how much would the company's net operating income increase if Minneapolis increased its sales by $90,000 per year? Assume no change in cost behavior patterns. (Omit the "$" sign in your response.)

Net operating income

$

Requirement 2:

Refer to the original data. Assume that sales in Chicago increase by $60,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage amounts to 2 decimal places. Input all amounts as positive value. Omit the "$" and "%" signs in your response.)

			Segments
	Total Company		Chicago		Minneapolis
	Amount	%	Amount	%	Amount	%
Sales	$		$		$
Variable expenses
Contribution margin
Traceable fixed expenses
Office segment margin			$		$
Common fixed expenses not traceable to segments
Net operating income	$