Question
Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone in Chicago
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 $ 1,087,500 100.0 % $ 217,500 100 % $ 870,000 100 % Variable expenses 587,250 54.0 % 65,250 30 % 522,000 60 % Contribution margin 500,250 46.0 % 152,250 70 % 348,000 40 % Traceable fixed expenses 243,600 22.4 % 113,100 52 % 130,500 15 % Office segment margin 256,650 23.6 % $ 39,150 18 % $ 217,500 25 % Common fixed expenses not traceable to offices 174,000 16.0 % Net operating income $ 82,650 7.6 %
1.Compute the companywide break-even point in dollar sales.
2.Compute the break-even point for the Chicago office and for the Minneapolis office.
3.
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