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 break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
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 break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
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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