Exercise 6-17 Working with a Segmented Income Statement [LO6-4]

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices?one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs

Exercise 6-1? Worklng with a Segmented Income Statement [me-4] Raner, Harris, 3. Chan is a consulting rm that specializes in information systems for medical and dental clinics. The rm has two ofcesone in Chicago and one in Minneapolis. The rm classies the direct costs of consultingjobs as variable costs. Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental Sales 33 560,000 100% 33 440,000 100% $ 220,000 100% Variable expenses 395,000 50% 286,000 65% 110,000 50% Contribution margin 264,000 40% 154,000 35% 110,000 50% Traceablexed expenses T0200 12% 22,000 5% 51200 26% Marketsegmentmargin 184,800 28% 33 132,000 30% $ 52,800 24% Common xed expenses not traceable to markets 10,800 3% Oicesegmentmargin 33 165,000 25% The companyr would like to initiate an intensive advertising campaign in one oftite two marketsegments during the next month. The campaign would cost$8,800. Marketing studies indicate that such a campaign would increase sales in the Medical market bv$T?,000 or increase sales in the Dental market bv$56,000. Required: 1-a. Calculate the increased segment margin. Increased segmentmargin 1-0. In which otthe markets would you recommend titatthe companv focus its advertising campaign? Q Medical 0 Dental