Question
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:
OfficeTotal CompanyChicagoMinneapolisSales$937,500100.0%$187,500100%$750,000100%Variable expenses506,25054.0%56,25030%450,00060%Contribution margin431,25046.0%131,25070%300,00040%Traceable fixed expenses210,00022.4%97,50052%112,50015%Office segment margin221,25023.6%$33,75018%$187,50025%Common fixed expenses not traceable to offices150,00016.0%Net operating income$71,2507.6%
Required:
1-a. Compute the companywide break-even point indollar 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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started