Question

Required information [The following information applies to the questions displayed below. 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 487,500 100.0% 263, 250 54.0% 224,250 46.0% 109, 200 22.4% 115,050 23.6% 78,000 16.0% $ 37,050 7.6% Office Chicago Minneapolis $ 97,500 100% $ 390,000 100% 29,250 30% 234,000 60% 68,250 70% 156,000 40% 50,700 52% 58,500 15% $ 17,550 18% $ 97,500 25% 3. Assume that sales in Chicago increase by $32,500 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 percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Segments Total Company Chicago Minneapolis

Answer 1

			Office
	Total company		Chicago		Minneapolis
Sales	520000	100.0%	130000	100.0%	390000	100.0%
Variable expenses	273000	52.5%	39000	30.0%	234000	60.0%
Contribution margin	247000	47.5%	91000	70.0%	156000	40.0%
Traceable fixed expenses	109200	21.0%	50700	39.0%	58500	15.0%
Office segment margin	137800	26.5%	40300	31.0%	97500	25.0%
Common fixed expenses not traceable to offices	78000	15.0%
Net operating income	59800	11.5%