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
$ 459,000
100.00%
$ 153,000
100.00%
$ 306,000
100.00%
Variable expenses
229,500
50.00%
45,900
30.00%
183,600
60.00%
Contribution margin
229,500
50.00%
107,100
70.00%
122,400
40.00%
Traceable fixed expenses
128,520
28.00%
79,560
52.00%
48,960
16.00%
Office segment margin
100,980
22.00%
$ 27,540
18.00%
$ 73,440
24.00%
Common fixed expenses not traceable to offices
64,260
14.00%
Net operating income
$ 36,720
8.00%
3. Assume that sales in Chicago increase by $51,000 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 intermediate calculations and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))
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