Raner, Harris & Chan is a consulting firm that specializes in information system

Question

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. A contribution format segmented income statement for the company's most recent year is given: Office Total Company Chicago Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income $. 750,000 100.0% 150,000 100% S 600,000 100% 360,000 60% 240,000 40% 15% $. 27,000 18% $150,000 25% 405,000 540% 345,000 46.0% 168,000 22.4% 177,000 23.6% 120,000 160% $ 57000 76% 45,000 30% 70% 52% 105,000 90,000 4.Award:4.00 points 3. Assume that sales in Chicago increase by $50,000 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 percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Total Company Chicago Amount Amount Amount

Explanation / Answer

Office Total Company Chicago Minneapolis Amount % Amount % Amount %   Sales $800,000 100.0% 200000 100.0% $600,000 100.0%   Variable expenses $420,000 52.5% 60,000 30.0% 360,000 60.0%   Contribution margin $380,000 47.5% 140,000 70.0% 240,000 40.0%   Traceable fixed expenses $168,000 21.0% 78,000 39.0% 90,000 15.0% Office segment margin $212,000 26.5% $62,000 31.0% $150,000 25.0%   Common fixed expenses 120,000 15.0%   Net operating income $92,000 11.5%

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