Raner, Harris and 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 $ 495,000 Chicago Sales Variable expenses Contribution margin Minneapolis $ 330,000 100% 198,000 60% 132,000 40% 52,800 16% 115,500 70% 85,800 Traceable fixed expenses 100% $ 165,000 100% 247,500 sex 49,500 30% 247,500 sex 138,600 28% 108,900 22% 69,300 14% $ 39,600 8% Office segnent margin $ 29,700 18% $ 79,200 24% Connon fixed expenses not traceable to offices Net operating income 3. Assume that sales in Chicago Increase by $55,000 next year and that sales in Minneapolis remain unchanged. Assume no change In fixed costs. a. Prepare a new segmented Income statement for the company. (Round your Intermediate calculations and percentage answers to 1 decimal place (1.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

Raner, Harris and 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 $ 495,000 Chicago Sales Variable expenses Contribution margin Minneapolis $ 330,000 100% 198,000 60% 132,000 40% 52,800 16% 115,500 70% 85,800 Traceable fixed expenses 100% $ 165,000 100% 247,500 sex 49,500 30% 247,500 sex 138,600 28% 108,900 22% 69,300 14% $ 39,600 8% Office segnent margin $ 29,700 18% $ 79,200 24% Connon fixed expenses not traceable to offices Net operating income 3. Assume that sales in Chicago Increase by $55,000 next year and that sales in Minneapolis remain unchanged. Assume no change In fixed costs. a. Prepare a new segmented Income statement for the company. (Round your Intermediate calculations and percentage answers to 1 decimal place (1.e. 0.1234 should be entered as 12.3 and other answers to the nearest whole dollar.))

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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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. A contribution format segmented income statement for the company’s most recent year is given: Assume that Minneapolis’ sales by major market are: Market Minneapolis Medical Dental Sales $ 570,000 100 % $ 380,000 100 % $ 190,000 100 % Variable expenses 342,000 60 % 247,000 65 % 95,000 50 % Contribution margin 228,000 40 % 133,000 35 % 95,000 50 % Traceable fixed expenses 68,400 12 % 19,000 5 % 49,400 26 % Market segment margin 159,600 28 % $ 114,000 30 % $ 45,600 24 % Common fixed expensesnot traceable to markets 17,100 3 % Office segment margin $ 142,500 25 % The company would like to initiate an intensive advertising campaign in one of…
Required information [The following information applies to the questions displayed below.] 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 $ 420,000 $ 525,000 283,500 241,500 Sales 100.0% $ 105,000 100% 100% Variable expenses 54.0% 31,500 30% 252,000 60% Contribution margin Traceable fixed expenses 70% 52% 46.0% 73,500 54,600 168,000 63,000 40% 117, 600 22.4% 15% Office segment margin 123,900 23.6% $ 18,900 18% $ 105,000 25% 84,000 $4 Common fixed expenses not traceable to offices 16.0% Net operating income 39,900 7.6% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $52,500 per year? Assume no…
The following is a summarized income statement for McClaron Manor Co.'s profit center 12608 for April: Contribution Margin $ 176,000 Period Expenses $ 12,000 Manager' s Salary $ 2,100 Corporate Expense Allocation $ 8,100 $ (22,200 ) Net Income $ 153,800 Which of the following amounts is most likely subject to the control of the profit center's manager? (CPA, adapted) Multiple Choice Contribution Margin of $176,000 and Period Expenses of $14,100. Contribution Margin of $176,000. Contribution Margin of $176,000 and Period Expenses of $22,200. Contribution Margin of $176,000 and Period Expenses of $12,000.
Required information [The following information applies to the questions displayed below.] Raner, Harris and 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 Sales $ 150,000 100% 50% 50% Variable expenses Contribution margin 45,000 105,000 78,000 Traceable fixed expenses 28% Office segment margin 22% $ 27,000 Common fixed expenses not traceable to offices 14% Net operating income 8% Assume that Minneapolis' sales by major market are: Market Minneapolis Medical Dental Sales $ 300,000 100% Variable expenses Contribution margin $ 200,000 100% $ 100,000 100% 128,000 64% 52,000 52% 72,000 36% 48,000 48% 12,000 6% 21,000 21% $ 60,000 30% 27% 180,000 60% 120,000 40% 33,000…
Lewisville CorporationIn order to better match cost with revenues, Lewisville Corporation distributes its service department overhead costs to producing departments. Information for April is presented here. Maintenance Utilities Overhead costs incurred $18,700 $9,000 Service provided to: Maintenance Dept. 10% Utilities Dept. 20% Producing Dept. A 40% 30% Producing Dept. B 40% 60% Assume that Lewisville Corporation distributes service department overhead costs based on the algebraic method. What would be the formula to determine the total maintenance costs? Group of answer choices M = $18,700 + .10U M = $9,000 + .20U M = $18,700 + .30U + .40A + .40B M = $27,700 + .40A + .40B
Bed & Bath, a retaling company, has two departments-Hardware and Linens. The company's most recent monthly contribution format Income statement follows: Departnent Linens $ 4, 290,000 $ 3,130,000 $ 1,160,000 414, 000 Total Hardware sales variable expenses 1,364,000 95e, eee Contribution margin Fixed expenses 2,926, 000 2,160, 000 2,180, e00 1,318, eee 870, 000 s (104, eee) 746, 000 85e, e00 Net operating incone (loss) 766,000 $ A study indicates that $378.000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. in addition, the ellmination of the Linens Department will result in a 14% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Carr Company provides human resource consulting services to small- and medium-sized companies. Last year, Carr provided services to 700 clients. Total fixed costs were $159.000 with total variable costs of $87x500. Based on this information, complete this chart:
Sanchez & Vukmin, LLP, is a full-service accounting firm located near Chicago, Illinois. Last year, Sanchez provided tax preparation services to 500 clients. Total fixed costs were $265,000 with total variable costs of $180,000. Based on this information, complete this chart.
A monthly income statement for a small consulting company is shown below. From these data calculate the following: a. Labor Utilization Rate b. Break Even Multiplier c. Effective Labor Multiplier. REVENUE $372,000| Sales 372,000 COSTS $276,000 Direct Costs $120,000| Salaries 120,000 Indirect Costs $156,000 Salaries 73,500 Benefits 54,190 Rent 5,000 Utilities 1,950 3,210 5,970 Professional Development Depreciation Supplies Used 1,820 Interest 1,760 Other 8,600 NET INCOME (PROFIT) $96,000
Bed & Bath, a retalling company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,220,000 1,220,000 3,000,000- 2,340,000 5.660,000 Department Hardware $ 3,200,000 819,000 2,381,000 1,490,000 $ 891,000 Linens $1,020,000 401,000 619,000 850,000 $ (231,000) A study indicates $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 17% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow. Repairs HR IT Repairs HR ON 10% ON Repairs allocation Total costs allocated Service department costs HR allocation IT allocation 10% IT 08 20% The direct costs of the service departments in the previous period were $76,000 for Repairs, $95,600 for HR, and $171,000 for IT. Required: Use the step method to allocate the service department costs to the production departments. Allocate HR costs first, followed by IT, and then Repairs. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) M1 M2 40% 60% 35% 358 20% 70% Repairs HR IT M2
To better match cost to revenues Lewisville Corporation distributes its service department overhead costs to producing departments. Information for April is presented here. Maintenance Utilities Overhead costs incurred $18,700 $9,000 Service provided to: Maintenance Dept. 10% Utilities Dept. 20% Producing Dept. A 40% 30% Producing Dept. B 40% 60% Using the step method, how much of Lewisville's Corporation’s Utilities Department cost is allocated between Departments A and B? (order of allocation begins with Maintenance) Group of answer choices $9,900 $10,800 $12,740 $27,700 In order to better match cost with revenues, Lewisville Corporation distributes its service department overhead costs to producing departments. Information for April is presented here. Maintenance Utilities Overhead costs incurred $18,700 $9,000 Service provided to: Maintenance Dept. 10% Utilities Dept. 20%…