Question

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	$	562,500		100.0	%		$	112,500		100	%		$	450,000		100	%
Variable expenses		303,750		54.0	%			33,750		30	%			270,000		60	%
Contribution margin		258,750		46.0	%			78,750		70	%			180,000		40	%
Traceable fixed expenses		126,000		22.4	%			58,500		52	%			67,500		15	%
Office segment margin		132,750		23.6	%		$	20,250		18	%		$	112,500		25	%
Common fixed expenses not traceable to offices		90,000		16.0	%
Net operating income	$	42,750		7.6	%

3. Assume that sales in Chicago increase by $37,500 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).)

Segments Total Company Chicago Minneapolis Amount % Amount % Amount % Salesselected answer correct not attempted 100.0selected answer correct not attempted not attempted not attempted not attempted Variable expensesselected answer correct not attempted not attempted not attempted not attempted not attempted not attempted Contribution marginselected answer correct 0 100.0 0 0.0 0 0.0 Traceable fixed expensesselected answer correct not attempted not attempted not attempted not attempted not attempted not attempted not attempted 0 100.0 $0 0.0 $0 0.0 not attempted 90,000selected answer correct not attempted Net operating incomeselected answer correct $(90,000) 100.0

Help me please with the rest

Answer 1

• All working forms part of the answer

			Segments
	Total Company		Chicago		Minneapolis
	Amount	%	Amount	%	Amount	%
Sales	$       600,000.00	100.0%	$      150,000.00 [112500 + 37500]	100.0%	$       450,000.00	100.0%
Variable expenses	$       315,000.00	52.5%	$       45,000.00 [150000 x 30%]	30.0%	$       270,000.00	60.0%
Contribution margin	$       285,000.00	47.5%	$      105,000.00	70.0%	$       180,000.00	40.0%
Traceable fixed expenses	$       126,000.00	21.0%	$       58,500.00	39.0%	$        67,500.00	15.0%
Office Segment Margin	$       159,000.00	26.5%	$       46,500.00	31.0%	$       112,500.00	25.0%
Common Fixed expense not traceable to offices	$        90,000.00	15.0%
Net operating income	$        69,000.00	11.5%