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 $ 480,000 1089 240,000 504 240,000 50 134,400 28% 105,600 22% 67,200 14% $ 38,400 8% Office Chicago Minneapolis $ 165,000 1000 $ 315,000 1999 49,500 385 189,800 584 115,500 70% 126,000 40% 85,800 52% 50,400 16% $ 29,700 18% $ 75,600 24% Exercise 7-17 (Algo) Wo ng with a Segmented Income Statement (LO7-4) Assume that Minneapolis' sales by major market are: 644 Market Minneapolis Medical Dental Sales $ 315,000 100% $ 220,000 100% $ 120,000 100% Variable expenses 189,000 604 140,800 62,400 524 Contribution margin 126,000 40 79,200 365 57,600 48% Traceable fixed expenses 50,400 16% 13,200 64 25,200 21 office segment margin 75,600 245 $ 66,000 304 $ 32,400 27 Common fixed expenses not traceable to offices 15,000 5 % Net operating income $ 60,680 19 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 $10,000 Marketing studies indicate that such a campaign would increase sales in the Medical market by $50,000 or increase sales in the Dental market by $50,000. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits by Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 In which of the markets would you recommend that the company focus its advertising campaign? O Medical Dental