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 Total Company $ 495,000 Chicago Sales Variable expenses Contribution margin Minneapolis $ 330,000 100% 198,000 60% 132,000 40% 52,800 16% 115,500 70% 85,800 Traceable fixed expenses 100% $ 165,000 100% 247,500 sex 49,500 30% 247,500 sex 138,600 28% 108,900 22% 69,300 14% $ 39,600 8% Office segnent margin $ 29,700 18% $ 79,200 24% Connon fixed expenses not traceable to offices Net operating income 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 and percentage answers to 1 decimal place (1.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 and percentage answers to
1 decimal place (1.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))
Answer is complete but not entirely correct.
Total Company
Chicago
Minneapolis
Amount
%
Amount
Sales
100.0
$ 220,000✔
$ 330,000✔
Variable expenses
68,000
154,000
198,000✔
132,000
Contribution margin
Traceable fixed expenses
52,800✔
50.0 X
50.0
28.0 X
22.0 $ 68,200
14.0x
8.0
Office segment margin
Common fixed expenses not traceable to segments
Net operating income
✔
>
Amount
$495,000 X
247,500
247,500
138,600✔
108,900
69,300✔
$ 39,600
85,800✔✔
Segments
%
100.0
30.0✔
70.0
39.0✔
31.0
$ 79,200
%
100.0✔
80.0
40.0
16.0
24.0
Transcribed Image Text: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 and percentage answers to 1 decimal place (1.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.)) Answer is complete but not entirely correct. Total Company Chicago Minneapolis Amount % Amount Sales 100.0 $ 220,000✔ $ 330,000✔ Variable expenses 68,000 154,000 198,000✔ 132,000 Contribution margin Traceable fixed expenses 52,800✔ 50.0 X 50.0 28.0 X 22.0 $ 68,200 14.0x 8.0 Office segment margin Common fixed expenses not traceable to segments Net operating income ✔ > Amount $495,000 X 247,500 247,500 138,600✔ 108,900 69,300✔ $ 39,600 85,800✔✔ Segments % 100.0 30.0✔ 70.0 39.0✔ 31.0 $ 79,200 % 100.0✔ 80.0 40.0 16.0 24.0
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