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 $ 450,000 100% 225,000 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% $ 36,000 8% Office Net operating income increase Chicago $ 150,000 100% 45,000 30% 105,000 70% 78,000 52% $ 27,000 18% Minneapolis $ 300,000 100% 180,000 60% 120,000 40% 48,000 16% $ 72,000 24% Exercise 7-16 Part 2 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns.
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 $ 450,000 100% 225,000 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% $ 36,000 8% Office Net operating income increase Chicago $ 150,000 100% 45,000 30% 105,000 70% 78,000 52% $ 27,000 18% Minneapolis $ 300,000 100% 180,000 60% 120,000 40% 48,000 16% $ 72,000 24% Exercise 7-16 Part 2 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5] 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Mukh
![Required information
SB Exercise 7-16 through Exercise 7-17 (Static)
[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
costs. A contribution format segmented income statement for the company's most recent year is given:
consulting jobs as variable
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Office segment margin
Common fixed expenses not traceable to offices
Net operating income.
Total Company
$450,000 100%
225,000 50%
225,000 50%
126,000 28%
99,000 22%
63,000 14%
$36,000 8%
Office
Net operating income increase
Chicago
Minneapolis
$ 150,000 100% $ 300,000 100%
45,000 30%
60%
105,000 70%
40%
78,000 52%
180,000
120,000
48,000
16%
$ 27,000 18%
$72,000
24%
Exercise 7-16 Part 2 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4,
LO7-5]
2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume
no change in cost behavior patterns.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F369b8e36-96ad-449f-ad01-79081127dffb%2F4779e653-afb3-4fe0-8284-7de1a3b323e8%2Fjerztz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
SB Exercise 7-16 through Exercise 7-17 (Static)
[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
costs. A contribution format segmented income statement for the company's most recent year is given:
consulting jobs as variable
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Office segment margin
Common fixed expenses not traceable to offices
Net operating income.
Total Company
$450,000 100%
225,000 50%
225,000 50%
126,000 28%
99,000 22%
63,000 14%
$36,000 8%
Office
Net operating income increase
Chicago
Minneapolis
$ 150,000 100% $ 300,000 100%
45,000 30%
60%
105,000 70%
40%
78,000 52%
180,000
120,000
48,000
16%
$ 27,000 18%
$72,000
24%
Exercise 7-16 Part 2 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4,
LO7-5]
2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume
no change in cost behavior patterns.
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