[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 officesone 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 companys most recent year is given:

	Total Company		Office
			Chicago		Minneapolis
Sales	$ 456,000	100%	$ 153,000	100%	$ 303,000	100%
Variable expenses	228,000	50%	45,900	30%	181,800	60%
Contribution margin	228,000	50%	107,100	70%	121,200	40%
Traceable fixed expenses	127,680	28%	79,560	52%	48,480	16%
Office segment margin	100,320	22%	$ 27,540	18%	$ 72,720	24%
Common fixed expenses not traceable to offices	63,840	14%
Net operating income	$ 36,480	8%

Assume that Minneapolis sales by major market are:

	Minneapolis		Market
			Medical		Dental
Sales	$ 303,000	100%	$ 204,000	100%	$ 104,000	100%
Variable expenses	181,800	60%	130,560	64%	54,080	52%
Contribution margin	121,200	40%	73,440	36%	49,920	48%
Traceable fixed expenses	48,480	16%	12,240	6%	21,840	21%
Office segment margin	72,720	24%	$ 61,200	30%	$ 28,080	27%
Common fixed expenses not traceable to offices	15,000	5 %
Net operating income	$ 57,720	19 %

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 $6,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,000 or increase sales in the Dental market by $38,000.

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?

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 $ 456,000 100% 228,000 50% 228,000 508 127,680 288 100, 320 22% 63,840 14% $ 36, 480 8% Office Chicago Minneapolis $ 153,000 100% $ 303,000 100% 45,900 30% 181,800 60% 107,100 708 121,200 40% 79,560 528 48,480 16% $ 27,540 18% $ 72,726 24% Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Minneapolis $ 303,000 100% 181,800 60% 121,200 40% 48,480 16% 72, 720 24% 15,000 5 % $ 57,720 19 8 Market Medical Dental $ 204,000 100% $ 104,000 130,560 648 54,080 73, 440 36% 49,920 12, 240 6% 21,840 $ 61,200 308 $ 28,080 100% 52% 48% 21% 27% 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 $6,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,000 or increase sales in the Dental market by $38,000. 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 $6,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42,000 or increase sales in the Dental market by $38,000. 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 Medical Market? Company's profits by 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's profits by