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, & Chan is a consulting firm that specializes in information systems for

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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 below: Sales Office Total Company Chicago Minneapolis $450,000 100% $ 150,000 100% $300,000 100% 225,000 50% 45,000 30% 180,000 60% Variable expenses Contribution margin 225,000 126,000 50% 28% 105,000 70% 78,000 52% 120,000 40% 48,000 16% Traceable fixed expenses Office segment margin 99,000 22% $ 27,000 18% $ 72,000 24% Common fixed expenses not traceable to offices 63,000 14% Net operating income $36,000 8% Required: 1-a. Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places.) Break-even point in dollar sales 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.) Break-even Point Chicago office 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? Greater than Less than Equal to 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 3. Refer to the original data. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e .1234 should be entered as 12.3)) Total Company Amount % Chicago Amount Segments Minneapolis Amount % % 0 0. 0 0 0. 0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 $ 0 0.0

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

Step: 3

blur-text-image

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

Accounting The Ultimate Guide To Accounting Principles

Authors: Greg Shields

1st Edition

1722964839, 978-1722964832

More Books

Students also viewed these Accounting questions