Required information Skip to question [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 officesone 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 companys most recent year is given: Total Company Office Chicago Minneapolis

Sales $ 522,000 100% $ 174,000 100% $ 348,000 100%

Variable expenses 261,000 50% 52,200 30% 208,800 60%

Contribution margin 261,000 50% 121,800 70% 139,200 40%

Traceable fixed expenses 146,160 28% 90,480 52% 55,680 16%

Office segment margin 114,840 22% $ 31,320 18% $ 83,520 24%

Common fixed expenses not traceable to offices 73,080 14%

Net operating income $ 41,760 8% Brewer 9e Rechecks 2021-11-15

Assume that Minneapolis sales by major market are: Minneapolis Market Medical Dental Sales $ 348,000 100% $ 232,000 100% $ 116,000 100%

Variable expenses 208,800 60% 148,480 64% 60,320 52%

Contribution margin 139,200 40% 83,520 36% 55,680 48%

Traceable fixed expenses 38,280 11% 13,920 6% 24,360 21%

Office segment margin 100,920 29% $ 69,600 30% $ 31,320 27%

Common fixed expenses not traceable to offices 17,400 5 %

Net operating income $ 83,520 24 %

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 $5,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by $46,400 or increase sales in the Dental market by $40,600.

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?