Question

Check my work Required information (The following information applies to the questions displayed below.) Part 1 of 2 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: 16.66 points eBook Total Company $ 450,000 100% 225,000 50% 225,000 50% 126,000 28% 99,000 22% 63,000 14% $ 36,000 84 Office Chicago Minneapolis $ 150,000 1008 $ 300,000 100% 45,000 30% 180,000 608 105,000 708 120,000 408 78,000 52% 48,000 168 $ 27,000 18% $ 72,000 24% Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Print References Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

Answer 1

1A) Breakeven point in dollars = Fixed cost/CM ratio

= (126,000+63,000)/50%

= 378,000

1B)

Chicago = 78,000/70%

= 111,429

Minneapolis = 48,000/40%

= 120,000

1C)

Greater than