Solution-By how much would the company net operating income

By how much would the company net operating income increase

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Reference no: EM133050159

Problem - Raner, Harris & 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
	Total Company		Chicago		Minneapolis
Sales	$975,000	100.0%	$195,000	100%	$780,000	100%
Variable expenses	526,500	54.0%	58,500	30%	468,000	60%
Contribution margin	448,500	46.0%	136,500	70%	312,000	40%
Traceable fixed expenses	218,400	22.4%	101,400	52%	117,000	15%
Office segment margin	230,100	23.6%	$35,100	18%	$195,000	25%
Common fixed expenses not traceable to offices	156,000	16.0%
Net operating income	$74,100	7.6%

Required - By how much would the company's net operating income increase if Minneapolis increased its sales by $97,500 per year? Assume no change in cost behavior patterns.

Reference no: EM133050159

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By how much would the company net operating income increase

Reference no: EM133050159

Reference no: EM133050159

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