Raner, Harris & Chan is a consulting firm that specializes in information system
ID: 2398432 • Letter: R
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 Minneapolis $525,000 100.0% $105,000 100% $420,000 100 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income 283,500 54.0% 241,500 46.0% _500 73,500 117,600 22.4% 54,600 123,900 23.6% $ 18,900 30% 70% 52% 18% 252,000 168,000 63,000 $105,000 60% 40 15% 25 84,000 $ 39,900 16.0% 7,6% 3. Assume that sales in Chicago increase by $35,000 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).)Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Office Statementshowing Computations Total Company Chicago Minneapolis Paticulars Amount % Amount % Amount % Sales 560,000.00 100.00% 140,000.00 100.00% 420,000.00 100.00% Variables Costs 294,000.00 52.50% 42,000.00 30.00% 252,000.00 60.00% Contribution Margin 266,000.00 47.50% 98,000.00 70.00% 168,000.00 40.00% Traceable fixed expenses 117,600.00 21.00% 54,600.00 39.00% 63,000.00 15.00% Office segment margin 148,400.00 26.50% 43,400.00 31.00% 105,000.00 25.00% Common fixed expenses not traceable to offices 84,000.00 15.00% Net Operating income 64,400.00 11.50%
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