Exercise 7-17 Working with a Segmented Income Statement (L07-4) 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. A contribution format segmented income statement for the company's most recent year is given: Assume that Minneapolis sales by major market are: Market Minneapolis Medical Dental Sales $750,000 1004 $500,000 1001 $250,000 100% Variable expenses 450,000 604 325,000 655 125,000 5e Contribution margin 300,000 494 175,000 355 125,000 54 Traceable fixed expenses 90,000 124 25,800 55 65,000 264 Market segment margin 210,000 284 $150,000 38% $ 60,000 244 Common fixed expenses not traceable to markets 22,500 34 office segment margin $187.500 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 $10.000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $87.500 or increase sales in the Dental market by $75.000 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 Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segnent margin Minneapolis Medical Dental $750,000 100% $500,000 100$ $250,000 100% 450,000 604 325,000 65% 125,000 50% 300,000 40% 175,000 359 125,000 50% 90,000 124 25,000 5% 65,000 264 210,000 28% $150,000 30% $ 60,000 24% 22,500 $187,500 3% 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 $10,000 Marketing studies indicate that such a campaign would increase sales in the Medical market by $87,500 or increase soles in the Dental market by $75,000. 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) ir 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 increase Required 2 > Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets Office segment margin Minneapolis Medical Dental $750,000 100% $500,000 100% $250,000 100% 450,000 699 325,000 65% 125,000 50% 300,000 405 175,000 35% 125,000 59 90,000 124 25,000 5% 65,000 26% 210,000 289 $150,000 30% $ 60,000 249 22,500 $187,500 34 255 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 $10,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $87,500 or increase sales in the Dental market by $75,000 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 Realired 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 increase by