Problem
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 Sales $ 525,000 100.0 % $ 105,000 100 % $ 420,000 100 % Variable expenses 283,500 54.0 % 31,500 30 % 252,000 60 % Contribution margin 241,500 46.0 % 73,500 70 % 168,000 40 % Traceable fixed expenses 117,600 22.4 % 54,600 52 % 63,000 15 % Office segment margin 123,900 23.6 % $ 18,900 18 % $ 105,000 25 % Common fixed expenses not traceable to offices 84,000 16.0 % Net operating income $ 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?