Raner, Harris, & 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. Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental $690,000 100% $ 460,000 100% $230,000 100% Sales 414,000 299,000 115,000 Variable expenses 60% 65% 50% 276,000 161,000 115,000 Contribution margin 40% 35% 50% Traceable fixed expenses 82,800 12% 23,000 5% 59,800 26% 193,200 138,000 Market segment margin 28% $ 30% $55,200 2 4% Common fixed expenses not traceable to markets 20,700 3% Office segment margin 172,500 2$ 25% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $9,200. Marketing studies indicate that such a campaign would increase sales in the Medical market by $80,500 or increase sales in the Dental market by $69,000. Required: 1-a. Calculate the increased segment margin. Medical Dental Increased segment margin 1-b. In which of the markets would you recommend that the company focus its advertising campaign? Medical Dental

Raner, Harris, & 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. Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental $690,000 100% $ 460,000 100% $230,000 100% Sales 414,000 299,000 115,000 Variable expenses 60% 65% 50% 276,000 161,000 115,000 Contribution margin 40% 35% 50% Traceable fixed expenses 82,800 12% 23,000 5% 59,800 26% 193,200 138,000 Market segment margin 28% $ 30% $55,200 2 4% Common fixed expenses not traceable to markets 20,700 3% Office segment margin 172,500 2$ 25% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $9,200. Marketing studies indicate that such a campaign would increase sales in the Medical market by $80,500 or increase sales in the Dental market by $69,000. Required: 1-a. Calculate the increased segment margin. Medical Dental Increased segment margin 1-b. In which of the markets would you recommend that the company focus its advertising campaign? Medical Dental

Name: Raner, Harris, & Chan is a consulting firm that specializes in inform
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Description: Raner, Harris, & Chan is a consulting firm that specializes in informationsystems for medical and dental clinics. The firm has two offices-one inChicago and one in Minneapolis. The firm classifies the direct costs ofconsulting jobs as variable 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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