Income Statements Segmented by Products Clay Consulting Firm provides three type
ID: 2416557 • Letter: I
Question
Income Statements Segmented by Products
Clay Consulting Firm provides three types of client services in three health-care-related industries. The income statement for July is as follows:
Prepare income statements segmented by client categories. Include a column for the entire firm in the statement.
Net Income $Answer
Income Statement For Month of July Sales Less variable costs Contribution margin Less fixed expenses $900,000 (601,000) 299,000 Service $70,000 Selling and administrative 65,000 (135,000) Net income $164,000 The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows: Sales Contribution margin ratio Direct fixed expenses of services Allocated common fixed service expenses Hospitals Physicians Nursing Care $300,000 30% $13,000 $1,500 $310,000 $290,000 30% 4096 $18,000 21,000 $1,000 $1,000Explanation / Answer
Hospitals
Physicians
Nursing care
Total
sales
310000
290000
300000
900000
Less- variable cost
217000
174000
210000
601000
Contribution margin
93000
116000
90000
299000
Less- direct fixed expense of service
18000
21000
13000
52000
Allocated common fixed service expenses
1000
1000
1500
3500
Other common service expense
(14500)
Selling and administrative
(65000)
Net income
$ 164000
Hospitals
Physicians
Nursing care
Total
sales
310000
290000
300000
900000
Less- variable cost
217000
174000
210000
601000
Contribution margin
93000
116000
90000
299000
Less- direct fixed expense of service
18000
21000
13000
52000
Allocated common fixed service expenses
1000
1000
1500
3500
Other common service expense
(14500)
Selling and administrative
(65000)
Net income
$ 164000