Answered step by step
Verified Expert Solution
Question
1 Approved Answer
[The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and
[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 $ 450,000 100.0% 243,000 54.0% 207,000 46.0% 100,800 22.4% 106,200 23.6% 72,000 16.% $ 34,200 7.6% Office Chicago Minneapolis 90,000 100% $ 360,000 100% 27,000 30%- 216,000 60% 63,000 70% 144,000 40% 46,800 52% 54,000 15% 16,200 18% $ 90,000 25% $ Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the 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? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answer to the nearest whole dollar amount.) Break-even point in dollar sales Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C 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 Exercise 7-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $45,000 per year? Assume no change in cost behavior patterns. Net operating income increase
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started