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Required information Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5] (The following information applies to the questions displayed below.) Raner, Harris
Required information Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5] (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 $ 637,500 100.0% 344,250 54.08 293, 250 46.08 142,800 22.48 150, 450 23.6% 102,000 16.08 $ 48,450 7.68 Office Chicago Minneapolis $ 127,500 100% $ 510,000 100% 38, 250 308 306,000 608 89, 250 708 204,000 408 66,300 52% 76,500 15 % $ 22,950 18% $ 127,500 25% Exercise 6-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $63,750 per year? Assume no change in cost behavior patterns. Answer is complete but not entirely correct. Net operating income increase $ 26,659 X
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