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:

Total Company Office Chicago Minneapolis Sales $ 535,500 100.00% $ 178,500 100.00% $ 357,000 100.00%

Variable expenses 267,750 50.00% 53,550 30.00% 214,200 60.00%

Contribution margin 267,750 50.00% 124,950 70.00% 142,800 40.00%

Traceable fixed expenses 149,940 28.00% 92,820 52.00% 57,120 16.00%

Office segment margin 117,810 22.00% $ 32,130 18.00% $ 85,680 24.00%

Common fixed expenses not traceable to offices 74,970 14.00%

Net operating income $ 42,840 8.00%

2. By how much would the companys net operating income increase if Minneapolis increased its sales by $89,250 per year? Assume no change in cost behavior patterns.

3. Assume that sales in Chicago increase by $59,500 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.))