Question
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 | % | ||||||||||
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