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 300 Total Company $ 454,500 1000 227,250 500 227,250 505 127,260 280 99,990 226 63,630 140 $ 36,360 80 office Chicago Minneapolis $ 151,500 1000 $ 303,000 1008 45,450 181,800 603 106,050 701 121,200 400 78,780 520 48,480 160 $ 27,270 181 $ 72,720 240 Assume that Minneapolis sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses office segment nargis Common fixed expenses not traceable to offices Het operating income 400 Market Medical Dental $ 202,000 1005 5 101,000 1001 129,280 640 52,520 524 72,720 360 48.480 480 12,120 65 21,210 210 $ 60,600 300 $ 27,270 274 Minneapolis $ 303,000 1001 181,800 600 121,200 33,330 110 87,870 290 15,150 $ 72,720 24 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 $5,050, Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,400 thantal market 25 25 AFIRA 488 401 118 298 368 68 301 Contribution margin 121,200 72,720 48,480 Traceable fixed expenses 33,330 12,120 21,210 210 Office segment margin 87,870 $ 60,600 $ 27,270 278 Common fixed expenses not traceable to offices 15,150 56 Net operating income $. 72,720 24 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 $5.050. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,400 or increase sales in the Dental market by $35,350. 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 How much would the company's profits increase (decrease if it implemented the advertising campaign in the Medical Market? Company's profits by Required 2 > 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 $5,050. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,400 or increase sales in the Dental market by $35,350. 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 Dental Market? Company profits Required: 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? B. 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 in which of the markets would you recommend that the company focus its advertising campaign? Medical Dental
