Required information [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 segment margin Common fixed expenses not traceable to offices Net operating income. Total Company Net operating income increase $ 508,500 254,250 254,250 142,380 111,870 71,190 $ 40,680 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 169,500 50,850 118,650 88,140 $ 30,510 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 339,000 203,400 135,600 54,240 $ 81,360 100.00% 60.00% 40.00% 16.00% 24.00% woll 2. How much would the company's net operating income increase if Minneapolis increased its sales by $84,750 per year? Assume no change in cost behavior patterns.

Required information [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 segment margin Common fixed expenses not traceable to offices Net operating income. Total Company Net operating income increase $ 508,500 254,250 254,250 142,380 111,870 71,190 $ 40,680 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 169,500 50,850 118,650 88,140 $ 30,510 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 339,000 203,400 135,600 54,240 $ 81,360 100.00% 60.00% 40.00% 16.00% 24.00% woll 2. How much would the company's net operating income increase if Minneapolis increased its sales by $84,750 per year? Assume no change in cost behavior patterns.

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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Raner, Harris and 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: Office Chicago Sales Variable expenses Contribution margin Total Company $ 495,000 100% 247,5ee 58% 247,500 sex 138,600 28% 108,900 22% 69,300 14% $39,600 $ 165,000 100% 49,500 30% 115,500 70% 85,800 52% $ 29,700 18% Minneapolis $ 330,000 100% 198,000 60% 132,000 48% 52,800 16% 24% Traceable fixed expenses $ 79,200 Office segment margin Common fixed expenses not traceable to offices Net operating income 8% 3. Assume that sales in Chicago Increase by $55,000 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 Intermediate calculations…
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Spruce−Up Company provides cleaning services to commercial and residential customers. The commercial business segment provided services to 290 customers and the residential business segment provided services to 645 customers. Commercial Residential Total Service Revenue $93,000 $123,000 $216,000 Variable Costs 26,000 49,000 75,000 Fixed Costs 47,000 53,000 100,000 Operating Income $20,000 $21,000 $41,000 Identify the segment with the lower contribution margin ratio and show the amount of its contribution margin ratio. (Round your answer to two decimals.) A. Residential, 60.16% B. Residential, 39.84% C. Commercial, 21.51% D. Commercial, 44.96%
14 Howard Cooper, the president of Finch Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 36,000 hours of services in Year 3. Required Required Required A B с $ b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Finch charges customers $80 per hour, the firm can achieve 45,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same…
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! Required information [The following information applies to the questions displayed below.] Raner, Harris and 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 Net operating income increase $ 463,500 231,750 231,750 129,780 101,970 64,890 $ 37,080 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 154,500 46,350 108,150 80, 340 $ 27,810 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 309,000 185,400 123,600 49,440 $ 74,160 100.00% 60.00% 40.00% 16.00% 24.00% 2. By how much would the company's net operating income increase…
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