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Raner, Harris and 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:

Total Company Office

Chicago Minneapolis

Sales $ $540,000100\mathrm{.}00\%$ $ $180,000100\mathrm{.}00\%$ $ $360,000100\mathrm{.}00\%$

Variable expenses $270,00050\mathrm{.}00\%54,00030\mathrm{.}00\%216,00060\mathrm{.}00\%$

Contribution margin $270,00050\mathrm{.}00\%126,00070\mathrm{.}00\%144,00040\mathrm{.}00\%$

Traceable fixed expenses $151,20028\mathrm{.}00\%93,60052\mathrm{.}00\%57,60016\mathrm{.}00\%$

Office segment margin $118,80022\mathrm{.}00\%$ $ $32,40018\mathrm{.}00\%$ $ $86,40024\mathrm{.}00\%$

Common fixed expenses not traceable to offices $75,60014\mathrm{.}00\%$

Net operating income $ $43,2008\mathrm{.}00\%$

Assume that Minneapolis$$ sales by major market are:

Minneapolis Market

Medical Dental

Sales $ $360,000100\mathrm{.}00\%$ $ $240,000100\mathrm{.}00\%$ $ $120,000100\mathrm{.}00\%$

Variable expenses $216,00060\mathrm{.}00\%153,60064\mathrm{.}00\%62,40052\mathrm{.}00\%$

Contribution margin $144,00040\mathrm{.}00\%86,40036\mathrm{.}00\%57,60048\mathrm{.}00\%$

Traceable fixed expenses $39,60011\mathrm{.}00\%14,4006\mathrm{.}00\%25,20021\mathrm{.}00\%$

Market segment margin $104,40029\mathrm{.}00\%$ $ $72,00030\mathrm{.}00\%$ $ $32,40027\mathrm{.}00\%$

Common fixed expenses not traceable to markets $18,0005\mathrm{.}00\%$

Office segment margin $ $86,40024\mathrm{.}00\%$

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 $$6,000.$ Marketing studies indicate that such a campaign would increase sales in the Medical market by $$48,000$ or increase sales in the Dental market by $$42,000.$

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? Prepare a new segmented income statement for the company. $($Round your intermediate calculations and percentage answers to $1$ decimal place $($i$.$e$.0\mathrm{.}1234$ should be entered as $12\mathrm{.}3$ and other answers to the nearest whole dollar.$))$

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