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Case 6-30 (Algo) Service Organization; Segment Reporting [LO6-4] Music Teachers, Incorporated, is an educational association for music teachers that has 19,800 members. The association
Case 6-30 (Algo) Service Organization; Segment Reporting [LO6-4] Music Teachers, Incorporated, is an educational association for music teachers that has 19,800 members. The association operates from a central headquarters but has local membership chapters throughout the United States. Monthly meetings are held by the local chapters to discuss recent developments on topics of interest to music teachers. The association's magazine, Teachers' Forum, is issued monthly with features about recent developments in the field. The association publishes books and reports and also sponsors professional courses that qualify for continuing professional education credit. The association's statement of revenues and expenses for the current year is presented below. Revenues Expenses: Music Teachers, Incorporated Statement of Revenues and Expenses For the Year Ended November 30 Salaries Personnel costs Occupancy costs Reimbursement of member costs to local chapters Other membership services Printing and paper $ 3,352,600 940,000 235,000 227,000 520,000 530,000 324,000 210,000 74,000 Postage and shipping Instructors' fees General and administrative Total expenses Excess of revenues over expenses 31,000 3,091,000 $ 261,600 The board of directors of Music Teachers, Incorporated, has requested that a segmented income statement be prepared showing the contribution of each segment to the association. The association has four segments: Membership Division, Magazine Subscriptions Division, Books and Reports Division, and Continuing Education Division. Mike Doyle has been assigned responsibility for preparing the segmented income statement, and he has gathered the following data: a. The 19,800 members of the association pay dues of $100 per year, of which $20 covers a one-year subscription to the Teachers' Forum. Other benefits include membership in the association and chapter affiliation. The portion of the dues covering the magazine subscription ($20) should be assigned to the Magazine Subscriptions Division.
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