Required information SB Exercise 6-16 through Exercise 6-17 (Algo) The following information applies to the questions displayed below.) Raner, Harris & Chan is a consulting firm that specializes 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: Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 470,000 100% 234,000 50% 236,000 50% 132, 800 289 103, 200 228 65.800 14% $ 37, 400 8% Office Chicago Minneapolis $ 160,000 100% $ 310,000 100% 48,000 30% 186,000 60% 112,000 70% 124,000 40% 83,200 52% 49,600 16% $ 28,800 18% $ 74,400 24% Exercise 6-17 (Algo) Working with a Segmented Income Statement (LO6-4) Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Minneapolis $ 310,000 100% 186,000 60% 124,000 40% 34, 100 11% 89,900 29% 15,500 5% $ 74,400 24% Market Medical Dental $ 220,000 100% $ 120,000 100% 140, 800 64% 62,400 52% 87.000 36% 57,600 48% 13,200 65 25, 200 21% $ 66,000 30% $ 32,400 27% Ch Required information 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 $50,000 or increase sales in the Dental market by $50,000 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? How much would the company's profits increase (decrease) If it implemented the advertising campaign in the Medical Market? Company's profits Required 2 > How much would the company's profits increase (decrease if it implemented the advertising campaign in the Dental Market? Company's profits by In which of the markets would you recommend that the company focus its advertising campaign? O Medical Dental