Required information SB Exercise 7-16 through Exercise 7-17 (Algo) [The following information applies to the questions displayed below.] Raner, Harris and 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 Sales Variable expenses Contribution margin Total Company $ 463,500 100% 231,750 50% 231,750 50% 129,780 28% 101,970 22% 64,890 14% $ 37,080 8% Chicago $ 154,500 100% 46,350 30% 108,150 70% 80,340 52% $ 27,810 18% Minneapolis $ 309,000 100% 185,400 60% 123,600 49,440 16% $ 74,160 24% Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Exercise 7-17 (Algo) Working with a Segmented Income Statement [LO7-4] Assume that Minneapolis' sales by major market are: Minneapolis Medical Sales $ 309,000 100% 185,400 60% Variable expenses $ 206,000 100% 131,840 64% 74,160 36% 12,360 6% Dental $ 103,000 100% 53,560 52% 49,440 48% 21,630 21% $ 27,810 27% Contribution margin. 123,600 Traceable fixed expenses office segment margin $ 61,800 30% 33,990 118 89,610 29% 15,450 58 $ 74,160 24 8 Common fixed expenses not traceable to offices Net operating income 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 $5,150. Marketing studies indicate that such a campaign would increase sales in the Medical market by $41,200 or increase sales in the Dental market by $36,050. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Market Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits by Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 In which of the markets would you recommend that the company focus its advertising campaign? Medical Dental
