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.))
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 57P: Identifying Fixed, Variable, Mixed, and Step Costs Consider each of the following independent...
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