Required information SB Exercise 7-16 through Exercise 7-17 (Algo) [The following information applies to the questions d

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Required Information Sb Exercise 7 16 Through Exercise 7 17 Algo The Following Information Applies To The Questions D 1 (26.85 KiB) Viewed 9 times

Required Information Sb Exercise 7 16 Through Exercise 7 17 Algo The Following Information Applies To The Questions D 2 (28.77 KiB) Viewed 9 times

Required information SB Exercise 7-16 through Exercise 7-17 (Algo) [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 $ 522,6 100% 261,000 50% 261,000 50% 146,160 28% 114,840 22% 73,080 14% 8% $ 41,760 Chicago $ 174,000 Office 100% 52,200 30% 121,800 70% 90,480 52% 18% $ 31,320 Minneapolis $ 348,000 208,800 139,200 55,680 $ 83,520 100% 60% 40% 16% 24%
es Exercise 7-17 (Algo) Working with a Segmented Income Statement [LO7-4] Assume that Minneapolis sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income Minneapolis 100% $ 348,000 60% 208,800 139,200 40% 38,280 11% 100,920 29% 17,400 5% $ 83,520 24 % Market Medical $ 232,000 100% 148,489 64% 36% 83,520 13,920 $ 69,600 30% 6% Dental 100% 60,320 52% 48% 21% 27% $116,000 55,680 24,360 $ 31,320 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,800 Marketing studies indicate that such a campaign would increase sales in the Medical market by $46,400 or increase sales in the Dental market by $40,600 Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign?