Home / Questions / Raner, Harris & Chan is a consulting firm that specializes in information systems for medical...
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:
| Office | |||||||||||||||||
| Total Company | Chicago | Minneapolis | |||||||||||||||
| Sales | $ | 1,012,500 | 100.0 | % | $ | 202,500 | 100 | % | $ | 810,000 | 100 | % | |||||
| Variable expenses | 546,750 | 54.0 | % | 60,750 | 30 | % | 486,000 | 60 | % | ||||||||
| Contribution margin | 465,750 | 46.0 | % | 141,750 | 70 | % | 324,000 | 40 | % | ||||||||
| Traceable fixed expenses | 226,800 | 22.4 | % | 105,300 | 52 | % | 121,500 | 15 | % | ||||||||
| Office segment margin | 238,950 | 23.6 | % | $ | 36,450 | 18 | % | $ | 202,500 | 25 | % | ||||||
| Common fixed expenses not traceable to offices | 162,000 | 16.0 | % | ||||||||||||||
| Net operating income | $ | 76,950 | 7.6 | % | |||||||||||||
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?
2. By how much would the company’s net operating income increase if Minneapolis increased its sales by $101,250 per year? Assume no change in cost behavior patterns.
3. Assume that sales in Chicago increase by $67,500 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 percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).)
Apr 08 2020 View more View Less
To maximize production and minimize pumping costs, crude oil is heated to reduce its viscosity during transportation from a production field.(a) Consider a pipe-in-pipe c...
Jun 28 2020A possible market solution that a reputable firm can engage in when faced with the lemons problem isA) to offer a warranty.B) to engage in externalities.C) to create asy...
Dec 10 2019GTE’s Sylvania Lighting Division introduced “Prestige Partnership,” a program aimed at helping its 2,200 distributors do a more effective job of marketing Sylvania produc...
May 15 2020List the trade-offs you would consider for each of these decisions: a.Driving your own car versus public transportation. b.Buying a computer now versus waiting for an i...
Jul 25 2020NO Date Dote Question I 3.83 - A 2.2mm diameter and 10m long electric wire is fightly wrapped with a lmm thick plactic cover whose thermal conductivity is too 15 w/m.k. E...
Aug 19 2020In an ideal constant pressure cycle, ( is the one in which both, QA as well as QRare at constant pressure ) using air, the overall volume ratio of the cycle is 8:1. Adiab...
Jun 18 2020Treasury bill returns are 7%, 6%, 5%, and 8% over four years. The standard deviation of returns of Treasury bills is O A. 0.9% OB. 1.03% OC. 129% OD. 1.55% Click to selec...
Aug 28 2020The countries of East Wakovia and West Wakovia have the production possibilities tables for tobacco and corn shown below. Note that the costs of producing tobacco and cor...
Mar 27 2020A production plan for metal parts (in aggregate units) is summarized in the following table. Fixed setup cost for production in any week is 70 liras and inventory holdin...
Aug 23 2020Comparing Pharmaceutical PainkillersA pharmaceutical company is planning to introduce a new painkiller. In a preliminary experiment to determine its effectiveness, 30 peo...
Aug 02 2020