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2. How much would the company's net operating income increase if Minneapolis increased its sales by $75.750 per year? Assume no change in cost behavior patterns.

2. How much would the company's net operating income increase if Minneapolis increased its sales by $75.750 per year? Assume no change in cost behavior patterns.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required Information SB Exercise 6-16 through Exercise 6-17 (Algo) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It 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 below: Sales Variable expenses Contribution margin Traceable fixed expenses Office segrent margin Common fixed expenses not traceable to offices Net operating income Total Company $ 454,500 227,250 227,250 127, 250 99,990 Net operating income increase 63,630 $.36,360 100.00% 58.00% 58.00% 28.90% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,250 78,788 $ 27,270 Office 100.00% 38.00% 78.00% 52.80% 18.00% Minneapolis $ 303,090 181,800 121,200 48,480 $ 72,729 100.00% 68.00% 48.00% 15.00% 24.00% Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 2. How much would the company's net operating income increase if Minneapolis increased its sales by $75,750 per year? Assume no change in cost behavior patterns.
Transcribed Image Text:Required Information SB Exercise 6-16 through Exercise 6-17 (Algo) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It 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 below: Sales Variable expenses Contribution margin Traceable fixed expenses Office segrent margin Common fixed expenses not traceable to offices Net operating income Total Company $ 454,500 227,250 227,250 127, 250 99,990 Net operating income increase 63,630 $.36,360 100.00% 58.00% 58.00% 28.90% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,250 78,788 $ 27,270 Office 100.00% 38.00% 78.00% 52.80% 18.00% Minneapolis $ 303,090 181,800 121,200 48,480 $ 72,729 100.00% 68.00% 48.00% 15.00% 24.00% Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 2. How much would the company's net operating income increase if Minneapolis increased its sales by $75,750 per year? Assume no change in cost behavior patterns.
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