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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:

Total Company Office

Chicago Minneapolis

Sales $ $472,500100\mathrm{.}00\%$ $ $157,500100\mathrm{.}00\%$ $ $315,000100\mathrm{.}00\%$

Variable expenses $236,25050\mathrm{.}00\%47,25030\mathrm{.}00\%189,00060\mathrm{.}00\%$

Contribution margin $236,25050\mathrm{.}00\%110,25070\mathrm{.}00\%126,00040\mathrm{.}00\%$

Traceable fixed expenses $132,30028\mathrm{.}00\%81,90052\mathrm{.}00\%50,40016\mathrm{.}00\%$

Office segment margin $103,95022\mathrm{.}00\%$ $ $28,35018\mathrm{.}00\%$ $ $75,60024\mathrm{.}00\%$

Common fixed expenses not traceable to offices $66,15014\mathrm{.}00\%$

Net operating income $ $37,8008\mathrm{.}00\%$

Assume that Minneapolis$$ sales by major market are:

Minneapolis Market

Medical Dental

Sales $ $315,000100\mathrm{.}00\%$ $ $210,000100\mathrm{.}00\%$ $ $105,000100\mathrm{.}00\%$

Variable expenses $189,00060\mathrm{.}00\%134,40064\mathrm{.}00\%54,60052\mathrm{.}00\%$

Contribution margin $126,00040\mathrm{.}00\%75,60036\mathrm{.}00\%50,40048\mathrm{.}00\%$

Traceable fixed expenses $34,65011\mathrm{.}00\%12,6006\mathrm{.}00\%22,05021\mathrm{.}00\%$

Market segment margin $91,35029\mathrm{.}00\%$ $ $63,00030\mathrm{.}00\%$ $ $28,35027\mathrm{.}00\%$

Common fixed expenses not traceable to markets $15,7505\mathrm{.}00\%$

Office segment margin $ $75,60024\mathrm{.}00\%$

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 $$5,250.$ Marketing studies indicate that such a campaign would increase sales in the Medical market by $$42,000$ or increase sales in the Dental market by $$36,750.$

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?

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