Question: SB Exercise 6-16 through Exercise 6-17 (Algo) Skip to question [The following information applies to the questions displayed below.] Raner, Harris & Chan is a
SB Exercise 6-16 through Exercise 6-17 (Algo)
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[The following information applies to the questions displayed below.]
Raner, Harris & 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:
| Office | |||||||||||||||||
| Total Company | Chicago | Minneapolis | |||||||||||||||
| Sales | $ | 508,500 | 100.00 | % | $ | 169,500 | 100.00 | % | $ | 339,000 | 100.00 | % | |||||
| Variable expenses | 254,250 | 50.00 | % | 50,850 | 30.00 | % | 203,400 | 60.00 | % | ||||||||
| Contribution margin | 254,250 | 50.00 | % | 118,650 | 70.00 | % | 135,600 | 40.00 | % | ||||||||
| Traceable fixed expenses | 142,380 | 28.00 | % | 88,140 | 52.00 | % | 54,240 | 16.00 | % | ||||||||
| Office segment margin | 111,870 | 22.00 | % | $ | 30,510 | 18.00 | % | $ | 81,360 | 24.00 | % | ||||||
| Common fixed expenses not traceable to offices | 71,190 | 14.00 | % | ||||||||||||||
| Net operating income | $ | 40,680 | 8.00 | % | |||||||||||||
Exercise 6-16 Part 3 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5]
3. Assume that sales in Chicago increase by $56,500 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.
a. Prepare a new segmented income statement for the company. (Round your intermediate calculations and percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))
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