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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 below:
Office
company-wide breakeven: $469,565
chicago breakeven: $83,571
Minneapolis breakeven: $168,750
By how much would the company’s net operating income increase if Minneapolis increased its
sales by $56,250 per year? Assume no change in cost behavior patterns.
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 below:
Solution

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Medical Consulting Firm Breakeven Analysis

  • 1. 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 below: Office company-wide breakeven: $469,565 chicago breakeven: $83,571 Minneapolis breakeven: $168,750 By how much would the company’s net operating income increase if Minneapolis increased its sales by $56,250 per year? Assume no change in cost behavior patterns. 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 below: Solution