Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices$$one in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company$$s most recent year is given below:

Total Company Office

Chicago Minneapolis

Sales $ $540,000100\mathrm{.}00\%$ $ $180,000100\mathrm{.}00\%$ $ $360,000100\mathrm{.}00\%$

Variable expenses $270,00050\mathrm{.}00\%54,00030\mathrm{.}00\%216,00060\mathrm{.}00\%$

Contribution margin $270,00050\mathrm{.}00\%126,00070\mathrm{.}00\%144,00040\mathrm{.}00\%$

Traceable fixed expenses $151,20028\mathrm{.}00\%93,60052\mathrm{.}00\%57,60016\mathrm{.}00\%$

Office segment margin $118,80022\mathrm{.}00\%$ $ $32,40018\mathrm{.}00\%$ $ $86,40024\mathrm{.}00\%$

Common fixed expenses not traceable to offices $75,60014\mathrm{.}00\%$

Net operating income $ $43,2008\mathrm{.}00\%$

Required:

$1-$a$.$ Compute the companywide break$-$even point in dollar sales.

$1-$b$.$ Compute the break$-$even point for the Chicago office and for the Minneapolis office.

$1-$c$.$ Is the companywide break$-$even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break$-$even points?