Question

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?

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 lobs as variable costs. A contribution format segmented Income statement for the company's most recent year is given: 5252500 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 525,000 100.00 283 500 54.00 241,500 46.08 117,600 22.48 123,900 23.68 84,000 16.08 $ 39,900 7.66 Office Chicago Minneapolis $ 105,000 1001 $ 420,000 1008 31,500 301 252,000 608 73,500 701 168,000 40% 54,600 526 63,000 158 $ 18,900 186 $ 105,000 258 Exercise 6-16 Part 1 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? Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Req 1C Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.) Break-even point in dollar sales Reg 18 >

Answer 1

	Chicago	Minnepolis	Total
Sales	105,000	420,000	525,000
Varibale Exp	31,500	252,000	283,500
Contribution Margin	73,500	168,000	241,500
Traceable Fixed Exxp	54,600	63,000	117,600
Office Segment Margin	18,900	105,000	123,900
Common Fixed Cost			84,000
Net Income			39,900
Company wide break even point(Sales)
Breakeven Sales=	Fixed Cost/Contribution %
Fixed Cost	201600
Contribution %	46%
Breakeven Sales=	438,261
Braekeven for Chicago Office
Fixed Cost	54600
Contribution %	70%
Breakeven Sales=	78,000
Braekeven for Minnepolis Office
Fixed Cost	63000
Contribution %	40%
Breakeven Sales=	157,500
The Companies Break even is Greater than the sum of breakeven sales of Chicago Office & Minneapolis