Solution-How much would the company net operating income

How much would the company net operating income increase

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Reference no: EM132470803

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	$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%

Question 1: By how much would the company's net operating income increase if Minneapolis increased its sales by $101,250 per year? Assume no change in cost behavior patterns.

Reference no: EM132470803

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How much would the company net operating income increase

Reference no: EM132470803

Reference no: EM132470803

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