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
$ 526,500
100.00%
$ 175,500
100.00%
$ 351,000
100.00%
Variable expenses
263,250
50.00%
52,650
30.00%
210,600
60.00%
Contribution margin
263,250
50.00%
122,850
70.00%
140,400
40.00%
Traceable fixed expenses
147,420
28.00%
91,260
52.00%
56,160
16.00%
Office segment margin
115,830
22.00%
$ 31,590
18.00%
$ 84,240
24.00%
Common fixed expenses not traceable to offices
73,710
14.00%
Net operating income
$ 42,120
8.00%
3. Assume that sales in Chicago increase by $58,500 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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