Question

Chapter 6 i oi, Required information The following information applies to the questions displayed below) Part 2 of 3 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 7.14 points Skipped Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $450,000 100.0% 243,000 54.0% 207,000 46.0% 100,800 22.4% 106,280 23.6% office Chicago Minneapolis $ 90,080 100% $360,000 100% 27,600 30% 216,000 60% 63,000 70% 144,000 40% 46,800 52% 54, 15% $ 16,200 18% $ 90,000 25% 72,000 $ 34,200 16.0% 7.6% o References 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $45,000 per year? Assume no change in cost behavior patterns. Net operating income increase

Answer 1

sales variable expenses contrbution margin traceble fixed expenses office segment mrgin common fixed expenses not traceable to offices net operating income total company 450000 243000 207000 100800 106200 100.0% 54.0% 46.0% 22.4% 23.6% chicago 90000 27000 63000 46800 16200 office minneapolis 100% 360000 30% 216000 70% 144000 52% 54000 18% 90000 100% 60% 40% 15% 25% 72000 34200 16.0% 7.6% if minneapolis increases sales 45000 per year office total company chicago minneapolis sales 495000 100.0% 90000 100% 405000 variable expenses 267300 54.0% 27000 30% 243000 contrbution margin 227700 46.0% 63000 70% 162000 traceble fixed expenses 100800 20.4% 46800 52% 54000 office segment mrgin 126900 25.6% 16200 18% 108000 common fixed expenses not traceable to offices 72000 14.5% net operating income 54900 11.1% 100% 60% 40% 13% 27% net operating income increase 20700