Question
[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 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% |
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?
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 50% 127,680 28% 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 70% 121,200 40% 79,560 52% 48,480 16% $ 27,540 18% $ 72,720 24% 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. Show less A 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 number.) Break-even point in dollar sales Req 1A Req 1B > 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 answer to the nearest whole number.) Break-even Point Chicago office Minneapolis officeStep by Step Solution
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