Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone in Chicago

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 below:

Office

Total Company Chicago Minneapolis
Sales $ 862,500 100.0 % $ 172,500 100 % $ 690,000 100 %
Variable expenses 465,750 54.0 % 51,750 30 % 414,000 60 %
Contribution margin 396,750 46.0 % 120,750 70 % 276,000 40 %
Traceable fixed expenses 193,200 22.4 % 89,700 52 % 103,500 15 %
Office segment margin 203,550 23.6 % $ 31,050 18 % $ 172,500 25 %
Common fixed expenses not traceable to offices 138,000 16.0 %
Net operating income $ 65,550 7.6 %

Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answer to the nearest whole dollar amount.)

Compute the break-even point for the Chicago office and for the Minneapolis office. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.)

Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert F. Meigs, Jan R. Williams, Mark S. Bettner, Susan F. Haka, Sue Haka

11th Edition

0072516682, 978-0072516685

More Books

Students explore these related Accounting questions