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 Office Total Company Chicago 45,000 30% 105,000 70% 78,000 52% $ 450,000 100% $ 150,000 100% 225,000 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% $36,000 8% $ 27,000 18% Minneapolis $ 300,000 180,000 120,000 48,000 $ 72,000 100% 60% 40% 16% 24% Exercise 7-16 Part 3 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] 3. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

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 Office Total Company Chicago 45,000 30% 105,000 70% 78,000 52% $ 450,000 100% $ 150,000 100% 225,000 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% $36,000 8% $ 27,000 18% Minneapolis $ 300,000 180,000 120,000 48,000 $ 72,000 100% 60% 40% 16% 24% Exercise 7-16 Part 3 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] 3. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

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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