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 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5]
2. By how much would the companys net operating income increase if Minneapolis increased its sales by $84,750 per year? Assume no change in cost behavior patterns.
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