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 $ 454,500 227,250 227,250 127,260 99,990 63,630 $ 36,360 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,050 78,780 $ 27,270 Office Minneapolis 100.00% $ 303,000 30.00% 181,800 70.00% 121,200 52.00% 48,480 18.00% $ 72,720 100.00% 60.00% 40.00% 16.00% 24.00% 3. Assume that sales in Chicago increase by $50,500 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 and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

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 $ 454,500 227,250 227,250 127,260 99,990 63,630 $ 36,360 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,050 78,780 $ 27,270 Office Minneapolis 100.00% $ 303,000 30.00% 181,800 70.00% 121,200 52.00% 48,480 18.00% $ 72,720 100.00% 60.00% 40.00% 16.00% 24.00% 3. Assume that sales in Chicago increase by $50,500 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 and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

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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Vinubhai
Gough Corporation has two divisions. Domestic and Foreign. Data from the most recent month appears below: 6. Total Company $668,000 Domestic Foreign $321,000 147,660 173,340 134,000 $ 39,340 Sales... Variable expenses. Contribution margin. Traceable fixed expenses. 220,530 447,470 335,000 112,470 $347,000 72,870 274,130 201,000 $ 73,130 Segment margin.. Common fixed expenses.. 73,480 $ 38,990 Net operating income.. The break-even in sales dollars for the company as a whole is closest to: A. $502,579 B. $107,216 C. $436,424 D. $609,794
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Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Total Department Hardware Linens Sales $4,200,000 $3,090,000 $1,110,000 Variable expenses 1,240,000 840,000 400,000 Contribution margin 2,960,000 2,250,000 710,000 Fixed expenses 2,300,000 1,470, 000 830,000 Net operating income (loss) $ 660,000 $ 780,000 $ (120,000) A study indicates that $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage ( disadvantage) of discontinuing the Linens Department?
PC Solutions, Inc. provides services to corporate and individual customers. During the month of June, the corporate business segment provided services to 500 customers and earned $60,000 in revenue. The individual business segment provided services to 200 customers and earned $40,000 in revenue. The variable costs for the corporate and individual business segments amounted to $33,000 and $25,000, respectively. In addition, the fixed costs of the company amounted to $7,500. Calculate the contribution margin from each customer of the individual business segment. (Round your answer to the nearest cent.) O A. $37.50 OB. $54.00 OC. $39.00 OD. $75.00
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) 1,307,000 Department Total $ 4,210,000 Hardware $ 3,040,000 Linens $ 1,170,000 403,000 767,000 840,000 $ (73,000) 2,903,000 2,290,000 $ 613,000 904,000 2,136,000 1,450,000 $ 686,000 A study indicates that $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Toronto and one in Vancouver. The firm classifies the direct costs of consulting jobs as variable costs. A segmented contribution format 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 Operating income Increase in operating income $ Total Company $900,000 100.0% 414,000 46.00 486,000 54.00 187,200 20.80 298,800 33.20 Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $87,000 per year? Assume no change in cost behaviour patterns. 43,500 117,000 13.00 $181,800 20.20% Toronto Vancouver $120,000 100% $780,000 100% 390,000 50 24,000 20 96,000 80 390,000 50 140,400 18 46,800 39 $ 49,200 41% $249,600 32% 2-a. Refer to…
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