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 $ 450,000 100 % $ 150,000 100 % $ 300,000 100 %

Variable expenses 225,000 50 % 45,000 30 % 180,000 60 %

Contribution margin 225,000 50 % 105,000 70 % 120,000 40 %

Traceable fixed expenses 126,000 28 % 78,000 52 % 48,000 16 %

Office segment margin 99,000 22 % $ 27,000 18 % $ 72,000 24 %

Common fixed expenses not

traceable to offices 63,000 14 %

Net operating income $ 36,000 8 %

Required:

1-a.	Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places.)

1-b.	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.)

1-c.

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

	Greater than
	Less than
	Equal to

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3.

value: 4.00 points

2.	By how much would the companys net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns.

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4.

value: 4.00 points

3.	Refer to the original data. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

a.	Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e .1234 should be entered as 12.3))