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Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, L07-5] [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, 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 Total Company $675,000 100.0% 364,500-54.0% Chicago Minneapolis Sales $135,000 100% $540,000 40,500305- 100% 94,50000324,000 70,200 60% Variable expenses 70%216,000 Contribution margin Traceable fixed expenses 40% 310,500 46.0% 151,200 22.4% 52% 81,000 15% Office segment margin 159,300 23.6% $24,300 18% $135,000 25% 108,000 16.0% Common fixed expenses not traceable to offices $ 51,300 7.6% Net operating income Exercise 7-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $67,500 per year? Assume o change in cost behavior patterns Net operating income increase
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