80.2K

Verified Solution

Link Copied!

$!$ Assume that Minneapolis' sales by major market are:

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 $$5,200.$ Marketing studies indicate that such a campaign would increase sales in the Medical market by $$41,600$

or increase sales in the Dental market by $$36,400.$

Required:

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Medical Market?

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Dental Market?

In which of the markets would you recommend that the company focus its advertising campaign?

Complete this question by entering your answers in the tabs below.

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Medical Market? Required:

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Medical Market?

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Dental Market?

In which of the markets would you recommend that the company focus its advertising campaign?

Complete this question by entering your answers in the tabs below.

How much would the company's profits increase $($decrease$)$ if it implemented the advertising campaign in the Dental Market?

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:

$\backslash$table$[[$Sales$,,,$office$],[$Total Company,Chicago,Minneapolis$],[$$$468,000,100\mathrm{.}00\%,$$$156,000,100\mathrm{.}00\%,$$$312,000,100\mathrm{.}00\%],[$Variable expenses,$234,000,50\mathrm{.}00\%,46,800,30\mathrm{.}00\%,187,200,60\mathrm{.}00\%],[$Contribution margin,$234,000,50\mathrm{.}00\%,109,200,70\mathrm{.}00\%,124,800,40\mathrm{.}00\%],[$Traceable fixed expenses,$131,040,28\mathrm{.}00\%,81,120,52\mathrm{.}00\%,49,920,16\mathrm{.}00\%],[$office segment margin,$102,960,22\mathrm{.}00\%,$$$28,080,18\mathrm{.}00\%,$$$74,880,24\mathrm{.}00\%],[\backslash$table$[[$Common fixed expenses not traceable to$],[$offices$]],65,520,14\mathrm{.}00\%,,,,],[$Net operating income,$$37,440,8\mathrm{.}00\%,,,,]]$

Assume that sales in Chicago increase by $$52,000$ 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 intermediate calculations and percentage answers to $1$ decimal place $($i$.$e$.0\mathrm{.}1234$ should be entered as $12\mathrm{.}3$ and other answers to the nearest whole dollar.$))$

$\backslash$table$[[,$Total Company,Segments$],[,$Chicago,Minneapolis$],[,$Amount,$\%,$Amount,$\%,$Amount,$\%],[$Sales$],[$Variable expenses$],[$Contribution margin,$0,0\mathrm{.}0,0,0\mathrm{.}0,0,0\mathrm{.}0],[$Traceable fixed expenses$],[$Office segment margin,$0,0\mathrm{.}0,,$$$,0\mathrm{.}0,$$$,0\mathrm{.}0],[$Common fixed expenses not traceable to segments$],[$Net operating income,$0,0\mathrm{.}0,,,,]]$

Show all imagesShow all images

Answer & Explanation Solved by verified expert

See Answer