Required information Exercise 7-16 Working with a Segmented Income Statement: Break-Even Analysis (L07-4, L07-5) 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 $ 712,500 100.01 384,750 54.01 327.750 46.08 159,600 22.41 168,150 23.61 114.000 16.00 $ 54.150 2.64 Office Chicago Minneapolis $ 142,500 1001 $570,000 1001 42,750 300 42.000 605 99,750 701 2 28.000 74.100 521 85,500 151 $ 25,650 181 142.500 251 Exercise 7-16 Part 1 Required: 1- Compute the companywide break-even point in dollar sales 1b. Compute the break-even point for the Chicago office and for the Minneapolis office 1 is the companywide break-even point greater than, less than or equal to the sum of the Chicago and Minneapolis break even Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis (L07-4, L07-5) (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 Chicago 1 42.500 1000 570.000 4 2,750 301 342,000 99,750 708 228.000 Total Company $ 712.500 100.01 384,750 54.08 327,750 46.00 1003 Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Met operating income $ 25,6501 102,500 250 168,150 23.61 114.000 16.00 $ 54,1507 .63 Exercise 7-16 Part 2 2. By how much would the company's net operating income increase ir Minneapolis increased its sales by 571.250 per yeart Assume no chade in cost behavior patterns. Not operating income increase Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis (L07-4, 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable : Net operating income Total Company $ 712,500 100.00 384,750 54.08 327, 750 46.00 159,600 22.44 168,150 23.6 114.000 16.09 54,150 Office Chicago Minneapolis $ 142,500 1001 $ 570,000 1001 42.750 301 342.000 99.750 708 228,000 400 74.100 52 85,500 $ 142,500 Exercise 7-16 Part 3 3. Assume that sales in Chicago increase by $47,500 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 (ie. 0.1234 should be entered as 12.3).)
