Exercise 6-17 Working with a Segmented Income Statement (L06-4) Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The film has two offices -one 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 company's most recent year is given Assume that Minneapolis' sales by major market are: 7 Market Minneapolis Medical Dental $660, eee 100% $440,000 1eeX $220,000 100% 396, eee 286,000 65% 119,800 sex 264, eee 40% 154,000 35% 110, eee sex 79,200 12% 22.ee 5% 57.2ee 26% 184,800 28% $132.000 3ex $ 52,8ee 24 Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segment margin sex 3% 19.800 $165,000 25% The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $8,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by $77,000 or increase sales in the Dental market by $66,000 Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits by 11 Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Minneapolis Medical Dental 5660.ece 100x $440,000 100 5220.000 100x 396,000 6ex 286, een 65% 110,000 Sex 264,000 4ex 154, eee 110,000 50% 79,200 12% 22,000 SX 57.200 26% 184, see 28% $132,000 3ex $ 52,800 24% 19,80e $165, eee 3% 25% 3:04:32 ences The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $8,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by $77.00 or increase sales in the Dental market by $66,000, Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? Company's profits by not traceable to markets Office segment margin 19,800 $165,000 3% 25% 23 The company would like to initiate an intensive advertising campaign in one of the two market segments during th campaign would cost $8,800. Marketing studies indicate that such a campaign would increase sales in the Medica or increase sales in the Dental market by $66,000. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the M 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 In which of the markets would you recommend that the company focus its advertising campaign? Medical Dental