70.2K

Verified Solution

Link Copied!

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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 483,000 100% 247,000 50% 236,000 50% 130,400 28% 105,600 22% 68,500 149 $ 37,100 89 Office Chicago Minneapolis $ 166,500 100% $ 316,500 1% 56,000 389 189,900 60% 110,500 70% 126,600 40% 80,200 52% 50,640 16% $ 30,300 18% $ 75,960 244 Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segment margin Minneapolis $ 316,500 100% 189,900 604 126,600 40% 50,640 16% 75,960 24% 15,000 55 $ 60,960 199 Market Medical Dental $ 222,000 100% $ 122,000 1005 133,500 64% 57,500 52% 88,500 36% 64,500 484 14,200 6% 26,500 219 $ 74,300 30% Y$ 38,000 27% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $10,500. Marketing studies indicate that such a campaign would increase sales in the Medical market by $51,000 or increase sales in the Dental market by $51,500. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign?" Complete this question by entering your answers in the tabs below. nces Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by Required Required 2 > your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits by

Answer & Explanation Solved by verified expert

See Answer