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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 offices-one in Chicago and one in Minneapolis.The firm classifies the direct costs of consulting jobs as variable costs.
Assume that Minneapolis' sales by major market are as follows:
288,000
60%
208,000
65%
80,000
50%
57,600
12%
16,000
5%
41,600
26%
$96,000
30%
$38,400
24%
$120,000
25%
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 $6,400.Marketing studies indicate that such a campaign would increase sales in the Medical market by $56,000 or increase sales in the Dental market by $48,000.
Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market.
Can somebody please answer and show how the answer was gotten so I can go back and figure out where I went wrong, that would be great!
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