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[The following information applies to the questions displayed below.) Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and
[The following information applies to the questions displayed below.) Raner, Harris and 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 $ 499,500 100.00% 249,750 50.00% 249,750 50.00% 139,860 28.00% 109,890 22.00% Office Chicago Minneapolis $ 166,500 100.00% $ 333,000 100.00% 49,950 30.00% 199,800 60.00% 116,550 70.00% 133,200 40.00% 86,580 52.00% 53,280 16.00% $ 29,970 18.00% $ 79,920 24.00% 69,930 $ 39,960 14.00% 8.00% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $83,250 per year? Assume no change in cost behavior patterns. Net operating income increase
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