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Required information [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for
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 $1,050,000 100.0% 567,000 54.0% 483,000 46.0% 235,200 22.4% 247,800 23.6% 168,000 16.0% $ 79,800 7.6% Office Chicago Minneapolis $ 210,000 100% $ 840,000 100% 63,000 30% 504,000 60% 147,000 70% 336,000 40% 109,200 52% 126,000 15% $ 37,800 18% $ 210,000 25% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $105,000 per year? Assume no change in cost behavior patterns. Net operating income increase 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 70% Total Company $1,050,000 100.0% 567,000 54.08 483,000 46.0% 235, 200 22.48 247,800 23.6% 168,000 16.0% $ 79,800 7.6% Office Chicago Minneapolis $ 210,000 100% $ 840,000 100% 63,000 30% 504,000 147,000 336,000 40% 109,200 52% 126,000 15% $ 37,800 18 % $ 210,000 25% 3. Assume that sales in Chicago increase by $70,000 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. 0.1234 should be entered as 12.3).)
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