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Required information Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5] (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: S1,750 Office Chicago Minneapolis 172,500 100% $ 690,000 100% 51,750 414,000 60% 120,750 70% 276,000 40% 89,700 52% 103,500 15% 31,050 18% $ 172,500 25% Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income 30% Total Company $ 862,500 100.0% 465,750 54.0% 396,750 46.0% 193,200 22.4% 203,550 23.6% 138,000 16.0% $ 65,550 7.6% $ Exercise 6-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $86,250 per year? Assume no change in cost behavior patterns. Net operating income increase Required information Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5) [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 $ 862,500 100.0% 465,750 54.0% 396,750 46.0% 193,200 22.4% 203,550 23.6% 138,000 16.0% $ 65,550 7.6% Office Chicago Minneapolis 172,500 100% $ 690,000 100% 51,750 30% 414,000 60% 120,750 70% 276,000 40% 89,700 52% 103,500 15% 31,050 18% $ 172,500 25% $ Exercise 6-16 Part 3 3. Assume that sales in Chicago increase by $57,500 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 % Required information Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5] [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 $ 862,500 100.0% 465,750 54.0% 396,750 46.9% 193,200 22.4% 203,550 23.6% 138,000 16.0% $ 65,550 7.6% Office Chicago Minneapolis $ 172,500 100% $ 690,000 100% 51,750 30% 414,000 60% 120,750 70% 276,000 40% 89,700 52% 103,500 15% $ 31,050 18% $ 172,500 25% Exercise 6-16 Part 1 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. Reg 1A Reg 1B Reg 1C 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 Req 1B >
