Raner, Harris and Chan is a consulting firm that specializes in information systems for medical...
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Accounting
Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone 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 companys most recent year is given:
Total Company
Office
Chicago
Minneapolis
Sales
$ 504,000
100.00%
$ 168,000
100.00%
$ 336,000
100.00%
Variable expenses
252,000
50.00%
50,400
30.00%
201,600
60.00%
Contribution margin
252,000
50.00%
117,600
70.00%
134,400
40.00%
Traceable fixed expenses
141,120
28.00%
87,360
52.00%
53,760
16.00%
Office segment margin
110,880
22.00%
$ 30,240
18.00%
$ 80,640
24.00%
Common fixed expenses not traceable to offices
70,560
14.00%
Net operating income
$ 40,320
8.00%
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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