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:

Assume that Minneapolis sales by major market are:

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 $11,200. Marketing studies indicate that such a campaign would increase sales in the Medical market by $98,000 or increase sales in the Dental market by $84,000.

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?

Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segment margin Minneapolis $840,000 100% 504,000 60% 336,000 40% 100,800 12% 235, 200 28% Market Medical Dental $560,000 100% $280,000 100% 364,000 65% 140,000 50% 196,000 35% 140,000 50% 28,000 5% 72,800 26% $168,000 30% $ 67,200 24% 3% 25,200 $210,000 25% How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits by