Raner, Harris & Chan is a consulting firm that specializes in information systems for medical...
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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 $1,125,000 100.0% 607,500 54.0% 517,500 46.0% 252,000 22.4% 265,500 23.6% 180,000 16.0% $ 85,500 7.6% Office Chicago Minneapolis $ 225,000 100% $ 900,000 100% 67,500 30% 540,000 60% 157,500 70% 360,000 40% 117,000 52% 135,000 15% $ 40,500 18% $ 225,000 25% Exercise 7-16 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
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