Raner Harris Chan is a consulting firm that specializes in

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 Office Total Company Chicago Minneapolis $525,000 100.0% $105,000 100% $420,000 100 Sales Variable expenses 283.500 241,500 117,600 22.4% 54,600 123,900 23.6% $ 18,900 54 . 0% 46.0% 252,000 168,000 63,000 60% 4 0 15% 25 30% 70% 52% 18% Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income 73,500 $105,000 84,000 16.0% $ 39,900 7.6% Required: 1-a. Compute the companywide break-even point in dollar sales 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office 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? Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 1C Compute the companywide break-even point in dollar sales. (Round \"CM ratio\" to 2 decimal places and final answers to the nearest whole dollar amount.)

Solution

1A.company wide break even point in dollar sales.

= company wide fixed cost / company wide contribution margin

=> (117,600 +84,000) / 46.0%

=>201,600 / 46.0%

=>$438,261...........(rounded to nearest dollar).

1-b.

chicago office break even point = traceable fixed cost of chicago office / contribution margin

=>$54,600 / 70%

=>$78,000.

minneapolis office break even point = traceable fixed cost of mineapolis office / contribution margin

=> $63,000 / 40%

=>$157,500.

1-c.Greater than.

companwide break even point = $438,261.

Is greater than the sum of chicago and minepolis break even point = $78,000 + $157,500 =>$235,500.