Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for

image text in transcribed

Required information [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: Office Total Company Chicago Minneapolis Sales $ 522,000 Variable expenses 261,000 100.00% 50.00% $ 174,000 100.00% $ 348,000 100.00% 52,200 30.00% 208,800 60.00% Contribution margin 261,000 50.00% 121,800 70.00% 139,200 40.00% Traceable fixed expenses 146,160 28.00% 90,480 52.00% 55,680 16.00% Office segment margin 114,840 22.00% $ 31,320 18.00% $ 83,520 24.00% Common fixed expenses not traceable to offices Net operating income 73,080 14.00% $ 41,760 8.00% Assume Minneapolis's sales by major market are: Market Minneapolis Medical Dental Sales $ 348,000 Variable expenses 208,800 100.00% 60.00% $ 232,000 148,480 100.00% 64.00% $ 116,000 100.00% 60,320 52.00% Contribution margin 139,200 40.00% 83,520 36.00% 55,680 48.00% Traceable fixed expenses 38,280 11.00% 13,920 6.00% 24,360 21.00% Market segment margin 100,920 29.00% $ 69,600 30.00% $ 31,320 27.00% Common fixed expenses not traceable to markets 17,400 5.00% Office segment margin $ 83,520 24.00% The company is planning a $5,800 advertising campaign next month in either the Medical or Dental market. Marketing studies indicate this campaign would increase Medical market sales by $46,400 or Dental market sales by $40,600. Required: 1. How much would the company's profits increase (decrease) if it advertised in the Medical market? 2. How much would the company's profits increase (decrease) if it advertised in the Dental market? 3. Should the company advertise in the Medical or Dental market? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: kieso, weygandt and warfield.

IFRS Edition

978-1118443965, 1118800532, 9781118800539, 978-0470873991

More Books

Students also viewed these Accounting questions