THIS IS A LONG QUESTION

Raner, Harris and 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:

	Total Company		Office
			Chicago		Minneapolis
Sales	$ 463,500	100%	$ 154,500	100%	$ 309,000	100%
Variable expenses	231,750	50%	46,350	30%	185,400	60%
Contribution margin	231,750	50%	108,150	70%	123,600	40%
Traceable fixed expenses	129,780	28%	80,340	52%	49,440	16%
Office segment margin	101,970	22%	$ 27,810	18%	$ 74,160	24%
Common fixed expenses not traceable to offices	64,890	14%
Net operating income	$ 37,080	8%

Brewer 9e Rechecks 2021-11-15

Required:

1-a. Compute the companywide break-even point in dollar sales.

1-b. Compute the break-even point for the Chicago office and for the Minneapolis office.

1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

Raner, Harris and 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:

	Total Company		Office
			Chicago		Minneapolis
Sales	$ 463,500	100%	$ 154,500	100%	$ 309,000	100%
Variable expenses	231,750	50%	46,350	30%	185,400	60%
Contribution margin	231,750	50%	108,150	70%	123,600	40%
Traceable fixed expenses	129,780	28%	80,340	52%	49,440	16%
Office segment margin	101,970	22%	$ 27,810	18%	$ 74,160	24%
Common fixed expenses not traceable to offices	64,890	14%
Net operating income	$ 37,080	8%

Brewer 9e Rechecks 2021-11-15

Required:

1-a. Compute the companywide break-even point in dollar sales.

1-b. Compute the break-even point for the Chicago office and for the Minneapolis office.

1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

Break-even point in dollar sales

Requirement 1b

Break-even Point

Chicago office

Minneapolis office

Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?

	Greater thanradio button unchecked1 of 3 Less thanradio button unchecked2 of 3 Equal toradio button unchecked3 of 3

2. By how much would the companys net operating income increase if Minneapolis increased its sales by $77,250 per year? Assume no change in cost behavior patterns.

Net operating income increase

3. Assume that sales in Chicago increase by $51,500 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

How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market?

Company's profits

decrease/ increase

by

ow 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?

	Medicalradio button unchecked1 of 2 Dentalradio button unchecked2 of 2

The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $5,800. The car is kept in a garage for a monthly fee.

Required:

1. Kristen drove the car 28,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)

2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

• Variable operating costsunanswered
• Depreciationunanswered
• Automobile taxunanswered
• License costsunanswered
• Insurance costs

Segments Total Company Chicago Minneapolis Amount % Amount % Amount % 0 0.0 0 0.0 0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 $ 0 0.0