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: Total Company Chicago Minneapolis $ 330,000 Sales Variable expenses Contribution margin Office $ 165,000 100% 49,500 30% 115,500 70% 85,800 52% 18% 100% 198,000 60% 132,000 48% $ 495,000 100% 247,500 58% 247,500 58% 138,600 28% 108,900 22% 69,300 14% $ 39,680 8% Traceable fixed expenses 52,800 16% 24% $ 29,700 $ 79,200 office segment margin Common fixed expenses not traceable to offices Net operating income 3. Assume that sales in Chicago increase by $55,000 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 (l.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

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Chapter1: Financial Statements And Business Decisions
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### Raner, Harris, and Chan Consulting Firm Case Study 

The Raner, Harris and Chan consulting firm specializes in information systems for medical and dental clinics. The firm has two offices— one in Chicago and one in Minneapolis. 

**Contribution Format Segmented Income Statement for the Most Recent Year:**

|   | Total Company | Office |   
|---|---|---|---|---|   
|   | Amount | % | Chicago | Amount | % | Minneapolis | Amount | % |   
| Sales  | $495,000  | 100%  | $165,000  | 100% | $330,000  | 100%  |   
| Variable Expenses  | $247,500  | 50%  | $49,500  | 30% | $198,000  | 60%  |   
| Contribution Margin  | $247,500  | 50%  | $115,500  | 70% | $132,000  | 40%  |   
| Traceable Fixed Expenses  | $188,000  | 38%  | $85,000  | 52% | $103,000  | 31%  |   
| Office Segment Margin  | $188,000  | 38%  | $29,700  | 18% | $79,200  | 24%  |   
| Common Fixed Expenses not Traceable to Offices  | $60,900  | 14% |
| Net Operating Income  | $39,600  | 8% |

### Future Projections 

If sales in Chicago increase by $55,000 next year while sales in Minneapolis remain unchanged, with no changes in fixed costs, the following adjustment is required:

1. **Compute the New Segmented Income Statement**

#### Given Adjustments:

- **Chicago Sales Increase**: $55,000
- **Fixed Costs** remain the same.

**Instruction for Calculation Adjustments**:
- **Round intermediate calculations and percentage answers to 1 decimal place** (e.g., 12.3%).
- **Round other answers to the nearest whole dollar**.

Below is the table template for the new segmented income statement for the company. You can use this template to compute the new projections based on the given data and adjustments.

|   | Segments |   
|---|---|---|---|---|
Transcribed Image Text:### Raner, Harris, and Chan Consulting Firm Case Study The Raner, Harris and Chan consulting firm specializes in information systems for medical and dental clinics. The firm has two offices— one in Chicago and one in Minneapolis. **Contribution Format Segmented Income Statement for the Most Recent Year:** | | Total Company | Office | |---|---|---|---|---| | | Amount | % | Chicago | Amount | % | Minneapolis | Amount | % | | Sales | $495,000 | 100% | $165,000 | 100% | $330,000 | 100% | | Variable Expenses | $247,500 | 50% | $49,500 | 30% | $198,000 | 60% | | Contribution Margin | $247,500 | 50% | $115,500 | 70% | $132,000 | 40% | | Traceable Fixed Expenses | $188,000 | 38% | $85,000 | 52% | $103,000 | 31% | | Office Segment Margin | $188,000 | 38% | $29,700 | 18% | $79,200 | 24% | | Common Fixed Expenses not Traceable to Offices | $60,900 | 14% | | Net Operating Income | $39,600 | 8% | ### Future Projections If sales in Chicago increase by $55,000 next year while sales in Minneapolis remain unchanged, with no changes in fixed costs, the following adjustment is required: 1. **Compute the New Segmented Income Statement** #### Given Adjustments: - **Chicago Sales Increase**: $55,000 - **Fixed Costs** remain the same. **Instruction for Calculation Adjustments**: - **Round intermediate calculations and percentage answers to 1 decimal place** (e.g., 12.3%). - **Round other answers to the nearest whole dollar**. Below is the table template for the new segmented income statement for the company. You can use this template to compute the new projections based on the given data and adjustments. | | Segments | |---|---|---|---|---|
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