Raner, Harris, & Chan is a consulting firm that specializes in information syste
ID: 2451843 • Letter: R
Question
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: 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 $5,600. Marketing studies indicate that such a campaign would increase sales in the Medical market by $49,000 or increase sales in the Dental market by $42,000. Calculate the increased segment margin. In which of the markets would you recommend that the company focus its advertising campaign?Explanation / Answer
Increase in margin:
As the increase in net margin is more in case of dental, so the company should focus on dental market for advertising compaign.
Medical Dental Sales 280,000 140,000 variable expenses 182,000 65% 70,000 50% contribution margin 98,000 70,000 traceable fixed expenses 14,000 36,400 market segment margin 84,000 30% 33,600 24% New Scenario Medical Dental Sales 329,000 182,000 variable expenses 213,850 65% 91,000 50% contribution margin 115,150 35% 91,000 50% traceable fixed expenses 19,600 42,000 market segment margin 95,550 29% 49,000 27%Related Questions
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