Raner harris amp chan is a consulting firm that specializes

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Reference no: EM13582987

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:

			Market
	Minneapolis		Medical		Dental
Sales	$480,000	100%	$320,000	100%	$160,000	100%
Variable expenses	288,000	60%	208,000	65%	80,000	50%
Contribution margin	192,000	40%	112,000	35%	80,000	50%
Traceable fixed expenses	57,600	12%	16,000	5%	41,600	26%
Market segment margin	134,400	28%	$96,000	30%	$38,400	24%
Common fixed expenses not traceable to markets	14,400	3%
Office segment margin	$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.

Required:

Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market.

	Medical	Dental
Increase in net operating income	$	$

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!

Reference no: EM13582987

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