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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. Assume that Minneapolis' sales by major market are: Minneapolis Market Medical Dental Sales $ 780,000 100% $ 520,000 100% $ 260,000 100% Variable expenses 468,000 60% 338,000 65% 130,000 50% Contribution margin 312,000 40% 182,000 35% 130,000 50% Traceable fixed expenses 93,600 12% 26,000 5% 67,600 26% Market segment margin 218,400 28% $ 156,000 30% $ 62,400 24% Common fixed expenses not traceable to markets 23,400 3% Office segment margin $ 195,000 25% 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 $10,400. Marketing studies indicate that such a campaign would increase sales in the Medical market by $91,000 or increase sales in the Dental market by $78,000. Required: 1-a. Calculate the increased segment margin. Medical Dental Increased segment margin ___________ _____________ 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. Assume that Minneapolis' sales by major market are: Minneapolis Market Medical Dental Sales $ 780,000 100% $ 520,000 100% $ 260,000 100% Variable expenses 468,000 60% 338,000 65% 130,000 50% Contribution margin 312,000 40% 182,000 35% 130,000 50% Traceable fixed expenses 93,600 12% 26,000 5% 67,600 26% Market segment margin 218,400 28% $ 156,000 30% $ 62,400 24% Common fixed expenses not traceable to markets 23,400 3% Office segment margin $ 195,000 25% 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 $10,400. Marketing studies indicate that such a campaign would increase sales in the Medical market by $91,000 or increase sales in the Dental market by $78,000. Required: 1-a. Calculate the increased segment margin. Medical Dental Increased segment margin ___________ _____________
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