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 $ 498,00 100% 249, eee 50% 249,000 . sex 139,440 28% 109,560 22% 69.720 14 $ 39,840 Office Chicago Minneapolis 5 174,000 100% $ 324,000 100% $2,200 30 194400 121,800 129,600 40% 90,480 51,840 16% $ 31,320 18% $ 77,760 245 70% 52 Exercise 7-17 (Algo) Working with a Segmented Income Statement (L07-4) Assume that Minneapolis' sales by major market are 100% 501 361 Market Sales Minneapolis Medical Dental $ 324.000 Variable expenses $ 232,000 100 $ 132,000 1003 104.400 Contebution marcin 148.400 6,640 129,000 403 33,520 Traceable fixed expenses 6360 4 51.840 168 132920 6X 27.220 21 office segment margin 72.760 245 $ 69,500 30% $ 35,640 27% Common fixed expenses not traceable to offices 15,000 53 Net operating income 5 62,760 10 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 $13,000 Marketing studies indicate that such a campaign would increase sales in the Medical market by $56,000 or increase sales in the Dental market by $59.000 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? 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 Company's profits by Renuindi Required 2 > 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 Required 1 Required 2 Required 3 In which of the markets would you recommend that the company focus its advertising campaign? OMedical Dental
