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:

1. By how much would the company's net operating income increase if Minneapolis increased its sales by $105,000 per year? Assume no change in cost behavior patterns.

2. Assume that sales in Chicago increase by $70,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Both amounts and percentages)

Required information [The following information applies to the questions displayed below. 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 Office Total Company Chicago Minneapolis $1,050,000 100.0% $210,000 100% $840,000 100% 69% 40% 15% Sales Variable expenses Contribution margirn Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income 567,000 54.0% 63,000 30% 70% 5270 504,000 336,000 126,000 483,eee 46.0% 147,000 109,200 235,200 22.4% 247,800 23.6% $ 37,800 18% $210,000 25% 168,000 16.0% $ 79,800 7.6%