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Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] [The following information applies to the questions displayed below.] Raner, Harris
Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] [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: Office Minneapolis $510,000 306,000 Total Company $637,500 344,250 293,250 Chicago $127,500 38,250 Sales 100.0% 100% 100% Variable expenses Contribution margin Traceable fixed expenses 54.0% 30% 60% 46.0% 89,250 70% 40% 204,000 15% 22.4% 52% 142,800 66,300 76,500 Office segment margin 25% $22,950 18% $127,500 23.6% 150,450 Common fixed expenses not traceable to offices 16.0% 102,000 $ 48,450 7.6% Net operating income Exercise 7-16 Part 3 Assume that sales in Chicago increase by $42,500 next year and that sales in Minneapolis remain unchanged. Assume no change fixed costs. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 -hould be ente red as 12.3).) Exercise 7-16 Part 3 3. Assume that sales in Chicago increase by $42,500 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. 0.1234 should be entered as 12.3).) Segments Total Company Minneapolis Chicago Amount % Amount % % Amount 0 0 0.0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 S 0 0.0
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