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:

	Total Company		Office
			Chicago		Minneapolis
Sales	$ 471,000	100%	$ 160,500	100%	$ 310,500	100%
Variable expenses	235,500	50%	48,150	30%	186,300	60%
Contribution margin	235,500	50%	112,350	70%	124,200	40%
Traceable fixed expenses	131,880	28%	83,460	52%	49,680	16%
Office segment margin	103,620	22%	$ 28,890	18%	$ 74,520	24%
Common fixed expenses not traceable to offices	65,940	14%
Net operating income	$ 37,680	8%

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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 471,000 100% 235,500 50% 235,500 50% 131,880 28% 103,620 22% 65,940 14% $ 37,680 8% Office Chicago Minneapolis $ 160,500 100% $ 310,500 100% 48,150 30% 186,300 60% 112,350 70% 124,200 40% 83,460 52% 49,680 16% $ 28,890 18% $ 74,520 24% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $78,500 per year? Assume no change in cost behavior patterns. Net operating income increase