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: Office Total Company Chicago Minneapolis Sales $ 600,000 100.0 % $ 120,000 100 % $ 480,000 100 % Variable expenses 324,000 54.0 % 36,000 30 % 288,000 60 % Contribution margin 276,000 46.0 % 84,000 70 % 192,000 40 % Traceable fixed expenses 134,400 22.4 % 62,400 52 % 72,000 15 % Office segment margin 141,600 23.6 % $ 21,600 18 % $ 120,000 25 % Common fixed expenses not traceable to offices 96,000 16.0 % Net operating income $ 45,600 7.6 % 3. Assume that sales in Chicago increase by $40,000 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).)

Answer 1

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