Music Teachers, Inc., is an educational association for music teachers that has 19,700 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 associations journal, 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 associations statement of revenues and expenses for the current year is presented below.
Case 5-30 Service Organization; Segment Reporting [LO5-4] Music Teachers, Inc., is an educational association for music teachers that has 19,700 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 journal, Teachers' Forum, is issued monthly with features about lopments 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 Music Teachers, Inc Statement of Revenues and Expenses For the Year Ended November 30 Revenues 3,335,500 Expenses Salaries 994,000 Personnel costs 248,500 Occupancy costs 291,000 Reimbursement of member costs to local chapters 550,000 Other membership services 500,000 Printing and paper 352,000 Postage and shipping 221,000 nstructors' fees 71,000 General and administrative 32,000 3,259,500 Total expenses 76,000 Excess of revenues over expenses The board of directors of Music Teachers, Inc., 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 prior to its preparation. Membership dues are S100 per year, of which $20 is considered to cover a one-year subscription to the association's journal. 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 Subscription Division b. One-year subscriptions to Teachers' Forum were sold to nonmembers and libraries at $30 per subscription. A total of 4,000 of these subscriptions were sold last yea n addition to subscriptions, the magazine generated S118,000 in advertising revenues. The costs per magazine subscription were $9 for printing and paper and $4 for postage and shipping. c. A total of 28,300 technical reports and professional texts were sold by the Books and Reports Division at an average unit selling price of $25. Average costs per publication were S4 for printing and paper and $2 fo postage and shipping d. The association offers a variety of continuing education courses to both members and nonmembers. The one-day courses had a tuition cost of $75 each and were attended by 2,500 students. A total of 1,860 students took two-day courses at a tuition cost of $125 for each student. Outside instructors were paid to teach some courses e. Assume that the Occupancy cost could be avoided by eliminating a division. Salary costs and space occupied by division follow
