Question

ncome Statements Segmented by Products Francisco Consulting Firm provides three types of client services in three health-care-related industries. The income statement for July is as follows: FRANCISCO CONSULTING FIRM Income Statement For Month of July Sales $ 820,000 Less variable costs (580,750) Contribution margin 239,250 Less fixed expenses Service $ 85,600 Selling and administrative 70,400 (156,000) Net income $ 83,250 The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows: Hospitals Physicians Nursing Care Sales $340,000 $205,000 $275,000 Contribution margin ratio 25% 35% 30% Direct fixed expenses of service $36,500 $8,500 $18,750 Allocated common fixed service expenses $8,500 $2,500 $4,000 Prepare income statements segmented by client categories. Include a column for the entire firm in the statement.

Answer 1

Answer:

FRANCISCO Consulting Firm

Francisco Consulting Firm

Segmented Income Statement

For the month of July

                                                     Hospitals  Physicians  Nursing      Total

                                                                                            Care

Sales                                            $340,000 $205,000 $275,000 $820,000

Variable costs                               255,000     133,250   192,500    580,750

Contribution margin ratio             $85,000     $71,750  $82,500  $239,250

Direct fixed expenses of service $36,500     $8,500    $18,750       63,750

Allocated common

 fixed service expenses                  8,500       2,500       4,000        15,000

Unallocated common fixed service expense                                      6,850

Selling and administrative              29,190      17,600      23,610      70,400

Total expenses                             $74,190   $28,600   $46,360 $156,000

Net Income                                    $10,810    $43,150    $36,140  $83,250

Explanation:

a) Data and Calculations:

CONSULTING FIRM

Income Statement

For Month of July

Sales                                                       $ 820,000

Less variable costs                  (580,750)

Contribution margin                 239,250

Less fixed expenses Service  $ 85,600

Selling and administrative          70,400 (156,000)

Net income                                              $ 83,250

The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows:

                                                                    Hospitals  Physicians  Nursing

                                                                                                            Care

Sales                                                           $340,000 $205,000 $275,000

Contribution margin ratio                                  25%      35%       30%

Direct fixed expenses of service                $36,500     $8,500     $18,750

Allocated common fixed service expenses $8,500     $2,500      $4,000