SB Exercise 7-16 through Exercise 7-17 (Static) Skip to question [The following information...

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Accounting

SB Exercise 7-16 through Exercise 7-17 (Static)

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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 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:

	Total Company		Office
	Total Company		Chicago		Minneapolis
Sales	$ 450,000	100%	$ 150,000	100%	$ 300,000	100%
Variable expenses	225,000	50%	45,000	30%	180,000	60%
Contribution margin	225,000	50%	105,000	70%	120,000	40%
Traceable fixed expenses	126,000	28%	78,000	52%	48,000	16%
Office segment margin	99,000	22%	$ 27,000	18%	$ 72,000	24%
Common fixed expenses not traceable to offices	63,000	14%
Net operating income	$ 36,000	8%

Exercise 7-16 Part 1 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4, LO7-5]

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?

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