Question

Required information [The following information applies to the questions displayed below.]    Raner, Harris & Chan...

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:

Office
Total Company Chicago Minneapolis
Sales $ 1,050,000 100.0 % $ 210,000 100 % $ 840,000 100 %
Variable expenses 567,000 54.0 % 63,000 30 % 504,000 60 %
Contribution margin 483,000 46.0 % 147,000 70 % 336,000 40 %
Traceable fixed expenses 235,200 22.4 % 109,200 52 % 126,000 15 %
Office segment margin 247,800 23.6 % $ 37,800 18 % $ 210,000 25 %
Common fixed expenses not traceable to offices 168,000 16.0 %
Net operating income $ 79,800 7.6 %

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?

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