Required information [The following information applies to the questions displayed below.) Raner, Harris & 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 450,000 1000 225,000 500 225,000 500 126,000 288 99,000 228 63,000 140 $ 36,000 Office Chicago Minneapolis $ 150,000 1008 $ 300,000 1008 45,000 308 180,000 608 105,000 708 120,000 405 78,000 528 48,000 168 $ 27,000 188 $ 72,000 240 Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Minneapolis $ 300,000 1005 180,000 608 120,000 400 33,000 87,000 298 15,000 58 S 72,000 246 Market Medical Dental $ 200,000 1008 $ 100,000 1000 128,000 52,000 520 72,000 361 48,000 12,000 66 21,000 210 $ 60,000 300 $ 27,000 278 114 The company would like to initiate an intensive Advertising campaign in one of the two market seaments during the next month. The Ni Prey 1 of 1 Next > Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Minneapolis $ 300,000 1000 180,000 600 120,000 400 33,000 110 87,000 290 15,000 50 $ 72,000 245 Market Medical Dental $ 200,000 1000 $ 100,000 100 128,000 648 52,000 528 72,000 368 48,000 12,000 60 21,000 216 $ 60,000 300 $ 27,000 278 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? 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 Red Required 2
