SB Exercise 7-16 through Exercise 7-17 (Static) Skip to question [The following information...
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SB Exercise 7-16 through Exercise 7-17 (Static)
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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
$ 450,000
100%
$ 150,000
100%
$ 300,000
100%
Variable expenses
225,000
50%
45,000
30%
180,000
60%
Contribution margin
225,000
50%
105,000
70%
120,000
40%
Traceable fixed expenses
126,000
28%
78,000
52%
48,000
16%
Office segment margin
99,000
22%
$ 27,000
18%
$ 72,000
24%
Common fixed expenses not traceable to offices
63,000
14%
Net operating income
$ 36,000
8%
Exercise 7-16 Part 1 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5]
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?
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