Three Part Question
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 $ 525,000 100.0% 283,500 54.0% 241,500 46.0% 117,600 22.4% 123,900 23.6% 84,000 16.0% $ 39,900 7.6% Office Chicago Minneapolis $ 105,000 100% $ 420,000 100% 31,500 30% 252,000 60% 73,500 70% 168,000 40% 54,600 52% 63,000 15% $ 18,900 18% $ 105,000 25% 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 Req 10 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 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 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 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 Req 1C Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points? O Greater than Less than O Equal to 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $52,500 per year? Assume no change in cost behavior patterns. Net operating income increase 3. Assume that sales in Chicago increase by $35,000 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).) Segments Total Company Amount Chicago Amount Minneapolis Amount 0 0. 0 0 0. 0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 S 0 0.0
