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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
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 64 Total Company $ 474,000 1089 237, cea 599 237,008 584 132, 720 28% 104,280 224 66, 360 144 $ 37,920 BL Office Chicago Minneapolis $ 162,000 1094 $ 312,000 100% 48,600 304 187,200 113,400 70% 124,800 40 84,240 524 49,920 16% $ 29, 160 184 $ 74,880 24 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $79,000 per year? Assume no change in cost behavior patterns. Not operating income increase
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