Compute the break-even point for the chicago office

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Reference no: EM132470795

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

 

Chicago

 

Minneapolis

Sales

$1,012,500

100.0%

$     202,500

100%

$     810,000

100%

Variable expenses

546,750

54.0%

60,750

30%

486,000

60%

Contribution margin

465,750

46.0%

141,750

70%

324,000

40%

Traceable fixed expenses

226,800

22.4%

105,300

52%

121,500

15%

Office segment margin

238,950

23.6%

$      36,450

18%

$     202,500

25%

Common fixed expenses not traceable to offices

162,000

16.0%

 

 

 

 

Net operating income

$          76,950

7.6%

 

 

 

 

Required:

Question 1-a Compute the companywide break-even point in dollar sales.

Question 1-b Compute the break-even point for the Chicago office and for the Minneapolis office.

Question 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?

Reference no: EM132470795

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