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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

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:

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% Sales 100% 60% Total Company $450,000 225,000 225,000 126,000 99,000 63,000 $36,000 % Chicago % 100% $150,000 100% 50% 45,000 30% 50% 105,000 70% 28% 78,000 52% 22% 27,000 18% Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses Net Operating Income 40% Minneapolis $300,000 180,000 120,000 48,000 72,000 16% 24% 14% 8% Information Flag question 1. Compute the companywide break- even point in dollar sales. Also, compute the break-even point for the Chicago office and for the Minneapolis office. Question 1 Not complete Marked out of 1.00 P Flag question Companywide break-even point in dollar sales Answer: Check Question 2 Not complete Marked out of 1.00 P Flag question Chicago office break-even point sales (round to whole dollar) Answer: Check Question 3 Not complete Marked out of 1.00 P Flag question Minneapolis office break-even point sales (round to whole dollar) Answer: Check Information | Flag question INFORMATION: The sum of the segment break-even points is less than the companywide break-even point because the companywide break-even point takes into account common fixed expenses that do not affect the segment break-even calculations. Question 4 Not complete Marked out of 1.00 P Flag question 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cot behavior patterns. Answer: Check 2 Information P Flag question 3. Refer to the original data. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Question 5 Not yet answered Marked out of 1.00 P Flag question A. Prepare a new segmented income statement for the company using the above format. Show both amounts and percentages. Question 6 Not complete Marked out of 1.00 P Flag question Chicago sales Answer: Check Question 7 Not complete Marked out of 1.00 P Flag question Chicago variable expenses Answer: Check Question 8 Not complete Marked out of 1.00 P Flag question Chicago contribution margin Answer: Check Question 9 Not complete Marked out of 2.00 P Flag question Chicago office segment margin Answer: Check Question 10 Not complete Marked out of 1.00 P Flag question Companywide office segment margin ratio (round to 3 decimal, 20.1% or 0.201) Answer: Check Question 11 Not complete Marked out of 1.00 P Flag question Companywide net operating income Answer: Check Information Flag question B. Observe from the income statement you have prepared that the contribution margin ratio for Chicago has remained unchanged at 70% (the same as in the above data) by that the segment margin ratio has changed. The segment margin ratio rises and falls as sales rise and fall due to the presence of fixed costs. The fixed costs are spread over a larger base as sales increase. In contrast to the segment ratio, the contribution margin ratio for a given segment is stable so long as there is no change in either the variable expenses or the selling price per unit of service

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