Answered step by step
Verified Expert Solution
Link Copied!

Question

00
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

image text in transcribedimage text in transcribed

image text in transcribedimage text in transcribed

[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: Part 1 of 3 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income points Total Company $1,050,000 100.0% 567,000 54.0% 483,000 46.0% 235, 200 22.4% 247,800 23.6% 168,000 16.0% $ 79,800 7.6% Office Chicago Minneapolis $ 210,000 100% $ 840,000 100% 63,000 504,000 60% 147,000 336,000 40% 109,200 52% 126,000 15% $ 37,800 18% $ 210,000 25% eBook Print References 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 Req1c Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.) Break-even point in dollar sales Req 1A Reg 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 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $105,000 per year? Assume no change in cost behavior patterns. Net operating income increase 3. Assume that sales in Chicago increase by $70,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Total Company Amount % Chicago Amount Segments Minneapolis Amount % %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions