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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 officesone in Chicago

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 companys most recent year is given:

Office
Total Company Chicago Minneapolis
Sales $ 412,500 100.0 % $ 82,500 100 % $ 330,000 100 %
Variable expenses 222,750 54.0 % 24,750 30 % 198,000 60 %
Contribution margin 189,750 46.0 % 57,750 70 % 132,000 40 %
Traceable fixed expenses 92,400 22.4 % 42,900 52 % 49,500 15 %
Office segment margin 97,350 23.6 % $ 14,850 18 % $ 82,500 25 %
Common fixed expenses not traceable to offices 66,000 16.0 %
Net operating income $ 31,350 7.6 %

2. By how much would the companys net operating income increase if Minneapolis increased its sales by $41,250 per year? Assume no change in cost behavior patterns.

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