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 Chicago Sales $450,000 100% Variable expenses 225,000 50% $ 150,000 45,000 100% Minneapolis $ 300,000 30% 180,000 100% 600 Contribution margin 225,000 50% 105,000 70% 120,000 40% Traceable fixed expenses 126,000 201 78,000 529 48,000 168 office segment margin 99,000 228 $27,000 18% $ 72,000 24% Common fixed expenses not traceable to offices 63,000 14% Net operating income $ 36,000 8 Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses: Market segment margin Common fixed expenses not traceable to markets Office segment margin Market Minneapolis Medical Dental $ 300,000 180,000 100% 60% $200,000 100% 128,000 641 $ 100,000 100% 52,000 52% 120,000 40% 33,000 119 72,000 369 12,000 68 48,000 406 21,000 214 87,000 299 15,000 59 $ 72,000 241 $ 60,000 30% $27,000 27 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 $5,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by $35,000.