# Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] [The following information applies...

###### Question:

Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5]

[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 Chicago Minneapolis Sales $1,125,000 100.0 %$ 225,000 100 % $900,000 100 % Variable expenses 607,500 54.0 % 67,500 30 % 540,000 60 % Contribution margin 517,500 46.0 % 157,500 70 % 360,000 40 % Traceable fixed expenses 252,000 22.4 % 117,000 52 % 135,000 15 % Office segment margin 265,500 23.6 %$ 40,500 18 % $225,000 25 % Common fixed expenses not traceable to offices 180,000 16.0 % Net operating income$ 85,500 7.6 %

Exercise 6-16 Part 2

2. By how much would the company’s net operating income increase if Minneapolis increased its sales by $112,500 per year? Assume no change in cost behavior patterns. 3. Assume that sales in Chicago increase by 75,000 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 percentage answers to one decimal place (i.e. 0.1234 should be entered in as 12.3).) ## Answers #### Similar Solved Questions 1 answer ##### 3. CURRENT RATIO Explain what it means for a firm to have a current ratio of... 3. CURRENT RATIO Explain what it means for a firm to have a current ratio of .50. Would the firm be better off with a current ratio of 1.50? What if it were 15.0? Explain your answers.... 1 answer ##### Question 8 (1.1 points) The following table presents the number of goals scored by the winning... Question 8 (1.1 points) The following table presents the number of goals scored by the winning team in a sample of championship games in the World Cup soccer tournament. Goals 1 2 3 45 Frequency 3 4 4 41 Consider these games to be a population. Let Xbe the number of goals scored in a game randomly c... 1 answer ##### In a minimum of 150 words explain in your own words what you understand about Keynesian... In a minimum of 150 words explain in your own words what you understand about Keynesian Theory. Make sure you are using your own understanding. Pretend you are explaining this to your Parents after class, and you are very excited about the new information you have acquired... 1 answer ##### *Exercise 15-5 ZYour answer is partially correct. Try again. Stellar Inc. issues 500 shares of$10...
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