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Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone 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 companys most recent year is given:

							Office
	Total Company						Chicago						Minneapolis
Sales	$	498,000		100	%		$	174,000		100	%		$	324,000		100	%
Variable expenses		249,000		50	%			52,200		30	%			194,400		60	%
Contribution margin		249,000		50	%			121,800		70	%			129,600		40	%
Traceable fixed expenses		139,440		28	%			90,480		52	%			51,840		16	%
Office segment margin		109,560		22	%		$	31,320		18	%		$	77,760		24	%
Common fixed expenses not traceable to offices		69,720		14	%
Net operating income	$	39,840		8	%

Exercise 6-16 Part 3 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5]

1. Assume that sales in Chicago increase by $58,000 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. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

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