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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 Company | | Chicago | | Minneapolis |
| Sales | $ | 525,000 | | 100.0 | % | | $ | 105,000 | | 100 | % | | $ | 420,000 | | 100 | % |
| Variable expenses | | 283,500 | | 54.0 | % | | | 31,500 | | 30 | % | | | 252,000 | | 60 | % |
| Contribution margin | | 241,500 | | 46.0 | % | | | 73,500 | | 70 | % | | | 168,000 | | 40 | % |
| Traceable fixed expenses | | 117,600 | | 22.4 | % | | | 54,600 | | 52 | % | | | 63,000 | | 15 | % |
| Office segment margin | | 123,900 | | 23.6 | % | | $ | 18,900 | | 18 | % | | $ | 105,000 | | 25 | % |
| Common fixed expenses not traceable to offices | | 84,000 | | 16.0 | % | | | | | | | | | | | | |
| Net operating income | $ | 39,900 | | 7.6 | % | | | | | | | | | | | | |
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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).)
