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 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 $ 450,000 1009 225,000 50% 225,000 508 126,000 288 99,000 22 Chicago $ 150,000 45,000 105,000 78,000 $ 27,000 Office Minneapolis 100% $ 300,000 1008 30% 180,000 60% 70% 120,000 40% 52% 48,000 168 18% $ 72,000 248 148 63,000 $ 36,000 8$ Exercise 6-17 (Static) Working with a Segmented Income Statement (LO6-4) 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 Minneapolis $ 300,000 100% 180,000 608 120,000 408 33,000 11% 87,000 298 15,000 5% $ 72,000 248 Market Medical Dental $ 200,000 100% $ 100,000 1008 128,000 648 52,000 528 72,000 368 48,000 48% 12,000 68 21,000 21% $ 60,000 308 $ 27,000 278 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. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign