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Sales Variable expenses Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two
Sales Variable expenses 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: Office Minneapolis 100% $750,000 100% 30% 450,000 60% Contribution margin Total Company $ 937,500 100.0% 506,250 54.0% 431,250 46.0% Chicago Traceable fixed expenses 210,000 22.4% Office segment margin 221,250 23.6% $187,500 56,250 131,250 70% 97,500 52% 18% $ 33,750 300,000 40% 112,500 15% $187,500 25% Common fixed expenses not traceable to offices. 150,000 16.0% Net operating income $ 71,250 7.6% Exercise 7-16 Part 3 3. Assume that sales in Chicago increase by $62,500 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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