! Required information [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 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 Office Total Company $ 450,000 225,000 100% 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% Chicago 150,000 100% 45,000 30% 105,000 70% 78,000 52% $ 27,000 18% Minneapolis $ 300,000 100% 180,000 60% 120,000 40% 48,000 16% $ 72,000 24% $ 36,000 8% 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? 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns. Net operating income increase Assume that Minneapolis' sales by major market are: Market Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segment margin Minneapolis Medical Dental $ 200,000 100% $ 100,000 100% 128,000 64% 72,000 36% 12,000 $ 300,000 100% 180,000 60% 120,000 40% 33,000 11% 87,000 29% 15,000 5% $ 72,000 24% 52,000 52% 48,000 48% 6% 21,000 21% $ 60,000 30% $ 27,000 27% 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 $5,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by $35,000. 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?