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Required information [The following information applies to the questions displayed below.]    Raner, Harris & Chan is a consulting...

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Accounting

Required information

[The following information applies to the questionsdisplayed below.]

  

Raner, Harris & Chan is a consulting firm that specializesin information systems for medical and dental clinics. The firm hastwo offices—one in Chicago and one in Minneapolis. The firmclassifies the direct costs of consulting jobs as variable costs. Acontribution format segmented income statement for the company’smost recent year is given:

Office
Total CompanyChicagoMinneapolis
Sales$525,000100.0%$105,000100%$420,000100%
Variable expenses283,50054.0%31,50030%252,00060%
Contribution margin241,50046.0%73,50070%168,00040%
Traceable fixed expenses117,60022.4%54,60052%63,00015%
Office segment margin123,90023.6%$18,90018%$105,00025%
Common fixed expenses not traceable to offices84,00016.0%
Net operating income$39,9007.6%

3. Assume that sales in Chicago increase by $35,000 next yearand that sales in Minneapolis remain unchanged. Assume no change infixed costs.

a. Prepare a new segmented income statement for the company.(Round your percentage answers to 1 decimal place (i.e.0.1234 should be entered as 12.3).)

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Requirement 3

Increase in net income (64400-39900) $       24,500.00
Income Statement
Office
Total Company Chicago Minneapolis
Amount % Amount % Amount %
Sales $    5,60,000.00 100.0% $   1,40,000.00 100.0% $         4,20,000.00 100.0%
Variable cost $    2,94,000.00 52.5% $       42,000.00 30.0% $         2,52,000.00 60.0%
Contribution margin $    2,66,000.00 47.5% $       98,000.00 70.0% $         1,68,000.00 40.0%
Traceable fixed cost $    1,17,600.00 21.0% $       54,600.00 39.0% $             63,000.00 15.0%
Office segment margin $    1,48,400.00 26.5% $       43,400.00 31.0% $         1,05,000.00 25.0%
Common fixed cost $        84,000.00 15.0%
Net Operating income $        64,400.00 11.5%

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