SB Exercise 6-16 through Exercise 6-17 (Algo) [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: Office Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable. to offices. Net operating income Total Company $ 531,000 265,500 265,500 148,680 116,820 Net operating income increase 74,340 $ 42,480 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 177,000 53,100 123,900 92,040 $ 31,860 S 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 354,000 212,400 141,600 56,640 $ 84,960 Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 100.00% 60.00% 40.00% 16.00% 24.00% 2. How much would the company's net operating income increase if Minneapolis increased its sales by $88,500 per year? Assume no change in cost behavior patterns.
SB Exercise 6-16 through Exercise 6-17 (Algo) [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: Office Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable. to offices. Net operating income Total Company $ 531,000 265,500 265,500 148,680 116,820 Net operating income increase 74,340 $ 42,480 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 177,000 53,100 123,900 92,040 $ 31,860 S 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 354,000 212,400 141,600 56,640 $ 84,960 Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 100.00% 60.00% 40.00% 16.00% 24.00% 2. How much would the company's net operating income increase if Minneapolis increased its sales by $88,500 per year? Assume no change in cost behavior patterns.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 37P
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