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[The following information applies to the questions displayed below.) Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and

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[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 ottice segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 450,000 100W 225,000 500 225,000 500 126,000 280 99,000 220 63,000 148 $36.000 88 office Chicago Minneapolis $ 150,000 1000 $ 300,000 100 45,000 301 180,000 600 105,000 705 120,000 400 78,000 520 48.000 160 $ 27,000 188 $ 72,000 240 Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Minneapolis $ 300,000 1008 180,000 608 120,000 404 33,000 110 87,000 295 15,000 50 $72,000 240 Market Medical Dental $ 200,000 1008 $ 100,000 1001 120,000 641 52,000 528 72,000 360 48,000 488 12,000 68 21,000 218 $ 60,000 301 $ 27,000 270 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 $5,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by $35,000 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 1 Required 2 Required 3 How much would the company's profits increase (de Company's profits increase by

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