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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 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 513,000 100.00% 256,500 50.00% 256,500 50.00% 143,640 28.00% 112,860 22.00% Office Chicago Minneapolis $ 171,000 100.008 $ 342,000 100.00 51,300 30.00% 205,200 60.00% 119,700 70.00% 136,800 40.00% 88,920 52.00% 54,720 16.00% $ 30,780 18.00% $ 82,080 24.00% 71,820 $ 41,040 14.00% 8.00% Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis (LO6- 4, LO6-5] 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $85,500 per year? Assume no change in cost behavior patterns. Net operating income increase 3. Assume that sales in Chicago increase by $57,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new segmented income statement for the company. (Round your intermediate calculations and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))
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