Raner, Harris and 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income. Total Company $ 454,500 227,250 227,250 127,260 99,990 63,630 $ 36,360 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,050 78,780 $ 27,270 Office Minneapolis 100.00% $ 303,000 30.00% 181,800 70.00% 121,200 52.00% 48,480 18.00% $ 72,720 100.00% 60.00% 40.00% 16.00% 24.00% 3. Assume that sales in Chicago increase by $50,500 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.))

Raner, Harris and 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income. Total Company $ 454,500 227,250 227,250 127,260 99,990 63,630 $ 36,360 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 151,500 45,450 106,050 78,780 $ 27,270 Office Minneapolis 100.00% $ 303,000 30.00% 181,800 70.00% 121,200 52.00% 48,480 18.00% $ 72,720 100.00% 60.00% 40.00% 16.00% 24.00% 3. Assume that sales in Chicago increase by $50,500 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.))

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 34P: Mason, Durant, and Westbrook (MDW) is a tax services firm. The firm is located in Oklahoma City and...

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Required information [The following information applies to the questions displayed below.] Raner, Harris and 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: Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 477,000 238,500 238,500 133,560 104,940 66,780 $38,160 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 159,000 47,700 111,300 82,680 $ 28,620 Office 100.00% 30.00% 70.00% 52.00% 18.00 % Minneapolis $318,000 190,800 127, 200 50,880 $ 76,320 100.00% 60.00% 40.00% 16.00% 24.00% Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the…
Required information [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It 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 below: Sales. Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income. Total Company Net operating income increase $ 508,500 254,250 254,250 142,380 111,870 71,190 $ 40,680 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 169,500 50,850 118,650 88,140 $ 30,510 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 339,000 203,400 135,600 54,240 $ 81,360 100.00% 60.00% 40.00% 16.00% 24.00% woll 2. How much would the company's net operating income increase if…
Required information (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 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 $ 513,000 Sales Variable expenses Contribution margin Traceable fixed expenses 100.00% 50.00% 50.00% Chicago $ 171,000 51, 300 119, 700 88,920 Minneapolis 100.00% 60.00 40.00% 16.00% $ 342,000 100.00% 30.00% 70.00% 52.00% 256, 500 205, 200 136,800 54,720 $ 82,080 256, 500 143,640 28.00% Office segment margin $ 30,780 112,860 22.00% 18.00% 24.00% Common fixed expenses not traceable to offices 71,820 $ 41,040 14.00% Net operating income 8.00% 2. By how much would the company's net operating income increase if Minneapolis increased its…
! Required information [The following information applies to the questions displayed below.] Raner, Harris and 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company Net operating income increase $ 463,500 231,750 231,750 129,780 101,970 64,890 $ 37,080 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 154,500 46,350 108,150 80, 340 $ 27,810 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 309,000 185,400 123,600 49,440 $ 74,160 100.00% 60.00% 40.00% 16.00% 24.00% 2. By how much would the company's net operating income increase…
Required information [The following information applies to the questions displayed below.] Raner, Harris and 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin. Common fixed expenses not traceable to offices Net operating income. Total Company $ 450,000 225,000 225,000 126,000 99,000 63,000 $36,000 100% 50% 50% 28% 22% 14% 8% Chicago $ 150,000 45,000 105,000 78,000 $ 27,000 Office 100% 30% 70% 52% 18% Minneapolis $ 300,000 180,000 120,000 48,000 $ 72,000 100% 60% 40% 16% 24% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost…
Required information [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 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 100.0% 54.0% 46.0% 22.4% Minneapolis $ 420,000 252,000 168,000 63,000 $ 105,000 Chicago $ 105,000 $ 525,000 283,500 Sales 100% 100% Variable expenses Contribution margin Traceable fixed expenses 30% 60% 40% 15% 31,500 73,500 54,600 18,900 70% 241,500 117,600 52% Office segment margin 123,900 23.6% 18% 25% Common fixed expenses not traceable to offices 84,000 16.0% Net operating income 39,900 7.6% 3. Assume that sales in Chicago increase by $35,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed…
Requlred Information [The following Information applies to the questions displayed below.] Raner, Harris & Chan Is a consulting firm that speclalizes In Information systems for medical and dental clinics. The firm has two offices-one In Chicago and one In Minneapolls. The firm classifies the direct costs of consulting Jobs as varlable costs. A contribution format segmented Income statement for the company's most recent year is glven: Office Minneapolis $ 420, e00 252,000 168,e00 63, e00 $ 105,e00 Total Company Sales variable expenses Contribution margin Traceable fixed expenses Chicago $ 185,e00 31,500 73,500 54,600 $ 525,e00 100.e% 1ee% 100% 283,500 54.e% 30% 6e% 241,500 117,600 123,9ee 46.0% 70% 40% 22.4% 52% 15% Office segment margin 23.6% 24 18,9ee 18% 25% Common fixed expenses not traceable to offices 84, eee 16.0% Net operating income 24 39,900 7.6% Requlred: 1-a. Compute the companywlde break-even polnt In dollar sales. 1-b. Compute the break-even polnt for the Chicago office…
[The following information applies to the questions displayed below.] Raner, Harris and 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: Chicago Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Total Company Office Minneapolis 100 % $ 150,000 100 % $ 300,000 100% $ 450,000 225,000 50% 45,000 30% 180,000 60% 225,000 50% 105,000 70 % 120,000 40% 126,000 28% 78,000 52% 48,000 16% 99,000 22% $ 27,000 18 % 63,000 14% $ 36,000 8% $72,000 24% Net operating income 3. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. a. Prepare a new…
Required information [The following information applies to the questions displayed below.] Raner, Harris and 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 100% 50% 50% 100% 60% Variable expenses Contribution margin. $ 150,000 45,000 105,000 78,000 40% Traceable fixed expenses 28% 16% Office segment margin 22% $ 27,000 24% Common fixed expenses not traceable to offices 14% 8% Net operating income. Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental Sales $ 300,000 100% $ 200,000 100% $ 100,000 100% Variable expenses. 180,000 60% Contribution margin 120,000 40% 128,000 64% 72,000 36% 12,000 6% $ 60,000 30% 52,000 52% 48,000 48%…
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Working with a Segmented Income Statement; Break-Even Analysis 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: Required: 1. Compute the companywide break-even point in dollar sales. Also, compute the break-even point for the Chicago office and for the 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? Why? 2. By how much would the company’s net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns. 3. Refer to the original data. Assume that sales in Chicago increase by 550,000 next year and that sales in Minneapolis remain…
Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Toronto and one in Vancouver. The firm classifies the direct costs of consulting jobs as variable costs. A segmented contribution format income statement for the company's most recent year is given below: \table[[\table[[Sales],[Variable expenses],[Contribution margin],[Traceable fixed expenses],[office segment margin],[Common fixed expenses],[not traceable to offices]],Total Company,office],[Toronto,Vancouver],[,1,100,000,100.0%,$330,000,100%,$770,000,100%