50.1K

Verified Solution

Link Copied!

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:

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?

\begin{tabular}{|c|c|c|c|c|c|c|} \hline \multirow[b]{3}{*}{ Sales } & \multirow{2}{*}{\multicolumn{2}{|c|}{ Total Company }} & \multicolumn{4}{|c|}{ Office } \\ \hline & & & \multicolumn{2}{|c|}{ Chicago } & \multicolumn{2}{|c|}{ Minneapolis } \\ \hline & $481,500 & 100.00% & $160,500 & 100.00% & $321,000 & 100.00% \\ \hline Variable expenses & 240,750 & 50.00% & 48,150 & 30.00% & 192,600 & 60.00% \\ \hline Contribution margin & 240,750 & 50.00% & 112,350 & 70.00% & 128,400 & 40.00% \\ \hline Traceable fixed expenses & 134,820 & 28.00% & 83,460 & 52.00% & 51,360 & 16.00% \\ \hline Office segment margin & 105,930 & 22.00% & $28,890 & 18.00% & $77,040 & 24.00% \\ \hline Commonfixedexpensesnottraceabletooffices & 67,410 & 14.00% & & & & \\ \hline Net operating income & $38,520 & 8.00% & & & & \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer