Assume Minneapolis's 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 $ 300,000 100% 180,000 60% 120,000 40% 33,000 11% 87,000 29% 15,000 5% $72,000 24% Market Medical $ 200,000 100% 128,000 64% 72,000 36% 12,000 6% $ 60,000 30% Required: 1. How much would the company's profits increase (decrease) if it advertised in the Medical market? How much would the company's profits increase (decrease) if it advertised in the Dental market? Dental 100% $ 100,000 52,000 52% 48,000 48% 21,000 21% $ 27,000 27% The company is planning a $5,000 advertising campaign next month in either the Medical or Dental market. Marketing studies indicat this campaign would increase Medical market sales by $40,000 or Dental market sales by $35,000.
Assume Minneapolis's 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 $ 300,000 100% 180,000 60% 120,000 40% 33,000 11% 87,000 29% 15,000 5% $72,000 24% Market Medical $ 200,000 100% 128,000 64% 72,000 36% 12,000 6% $ 60,000 30% Required: 1. How much would the company's profits increase (decrease) if it advertised in the Medical market? How much would the company's profits increase (decrease) if it advertised in the Dental market? Dental 100% $ 100,000 52,000 52% 48,000 48% 21,000 21% $ 27,000 27% The company is planning a $5,000 advertising campaign next month in either the Medical or Dental market. Marketing studies indicat this campaign would increase Medical market sales by $40,000 or Dental market sales by $35,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
par.8
![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:
Office
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Office segment margin
Common fixed expenses not traceable to
offices
Net operating income
Assume Minneapolis's sales by major market are:
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Total Company
$ 450,000
225,000
Market segment margin
Common fixed expenses not traceable to markets
Office segment margin
225,000
126,000
99,000
63,000
$36,000
100%
50%
50%
28%
22%
14%
8%
Chicago
87,000
15,000
$72,000
$ 150,000
45,000
105,000
78,000
$ 27,000
100%
30%
70%
52%
18%
Minneapolis
$ 300,000
180,000
120,000
48,000
$ 72,000
Market
Required:
1. How much would the company's profits increase (decrease) if it advertised in the Medical market?
2. How much would the company's profits increase (decrease) if it advertised in the Dental market?
3. Should the company advertise in the Medical or Dental market?
Minneapolis
Medical
Dental
$ 300,000 100% $ 200,000 100% $ 100,000 100%
180,000 60%
128,000 64%
120,000 40%
52,000 52%
48,000
48%
21,000 21%
72,000 36%
12,000 6%
30%
$ 60,000
33,000 11%
29%
27%
5%
24%
100%
60%
$ 27,000
40%
16%
24%
The company is planning a $5,000 advertising campaign next month in either the Medical or Dental market. Marketing studies indicate
this campaign would increase Medical market sales by $40,000 or Dental market sales by $35,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9de90b23-8bc9-4812-9c96-909bdaa19874%2Fc13fc831-74cf-42f6-a83a-9a57b8bc8eac%2Fpv89eh_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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:
Office
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Office segment margin
Common fixed expenses not traceable to
offices
Net operating income
Assume Minneapolis's sales by major market are:
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Total Company
$ 450,000
225,000
Market segment margin
Common fixed expenses not traceable to markets
Office segment margin
225,000
126,000
99,000
63,000
$36,000
100%
50%
50%
28%
22%
14%
8%
Chicago
87,000
15,000
$72,000
$ 150,000
45,000
105,000
78,000
$ 27,000
100%
30%
70%
52%
18%
Minneapolis
$ 300,000
180,000
120,000
48,000
$ 72,000
Market
Required:
1. How much would the company's profits increase (decrease) if it advertised in the Medical market?
2. How much would the company's profits increase (decrease) if it advertised in the Dental market?
3. Should the company advertise in the Medical or Dental market?
Minneapolis
Medical
Dental
$ 300,000 100% $ 200,000 100% $ 100,000 100%
180,000 60%
128,000 64%
120,000 40%
52,000 52%
48,000
48%
21,000 21%
72,000 36%
12,000 6%
30%
$ 60,000
33,000 11%
29%
27%
5%
24%
100%
60%
$ 27,000
40%
16%
24%
The company is planning a $5,000 advertising campaign next month in either the Medical or Dental market. Marketing studies indicate
this campaign would increase Medical market sales by $40,000 or Dental market sales by $35,000.
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