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CASE LO7-4 Music Teachers, Inc, is an educitional association for music teachers that has 20,000 memberx. Tte association operates from a central headquarters but has local membership chapters throughoct the United States. Monthly meetings are held by the local chapters to discuss recent developments of top ics of interest to music teachers. The association's magazite, Teachers" Fonam, is issued monthly wib features about recent developments in the field. The association publishes books and reports and alse sponsors professional courses that qualify for continuing professional education credit. The arsociatici: statement of revenues and expenses for the current year is presented below. (continued) CASE LO7-4 Music Teachers, Inc., is an educational association for music teachers that has 20,000 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 lop. ics 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. (continued) The board of directors of Music Teachers, Inc., has requested that a segmented income statement be peppred showing the contribution of each segment to the association. The association has four segments: isemberstup Division, Magazine Subscriptions Division, Books and Reports Division, and Continuing Education Division. Mike Doyle has been assigned responsibility for preparing the segmented income Gurenent, and he has gathered the following data: 2. The 20,000 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. b. A total of 2,500 one-year subscriptions to Teachers' Forum were also sold last year to nonmembers and libraries at $30 per subscription. In addition to subscriptions, the journal generated $100,000 in c. The costs to produce the Teachers' Forum magazine included $7 per subscription for printing and advertising revenues. paper and $4 per subscription for postage and shipping. d. A total of 28,000 technical reports and professional texts were sold by the Books and Reports Division at an average selling price per unit of $25. Average costs per publication were $4 for printing and a. The association offers a variety of continuing education courses to both members and nonmembers. paper and $2 for postage and shipping. The one-day courses had a tuition cost of $75 each and were attended by 2,400 students. A total of 1,760 students took two-day courses at a tuition cost of $125 for each student. Outside instructors were paid to teach some courses. I. Sala Personnel costs are 25% of salaries in the separate divisions as well as for the corporate staff. The $250,000 in occupancy costs (which can be allocated to segments based on their square feet occupied) includes $50,000 in rental cost for a warehouse used by the Books and Reports Division for storage 1. Printing and paper costs other than for magazine subscriptions and for books and reports relate to the purposes. Continuing Education Division. 1. General and administrative expenses include costs relating to overall administration of the association as a whole. The company's corporate staff does some mailing of materials for general administrative The expenses that can be traced or assigned to the corporate staff, as well as any other expenses purposes hat are not traceable to the segments, will be treated as common costs. It is not necessary to distinguish between variable and fixed costs. 1. Prepare a segmented income statement for Music Teachers, Inc. This statement should show the seg- Required: ment margin for each division as well as results for the association as a whole. 2. Give arguments for and against allocating all costs of the association to the four divisions. (CMA, adapted) CASE LO7-4 Music Teachers, Inc, is an educitional association for music teachers that has 20,000 memberx. Tte association operates from a central headquarters but has local membership chapters throughoct the United States. Monthly meetings are held by the local chapters to discuss recent developments of top ics of interest to music teachers. The association's magazite, Teachers" Fonam, is issued monthly wib features about recent developments in the field. The association publishes books and reports and alse sponsors professional courses that qualify for continuing professional education credit. The arsociatici: statement of revenues and expenses for the current year is presented below. (continued) CASE LO7-4 Music Teachers, Inc., is an educational association for music teachers that has 20,000 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 lop. ics 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. (continued) The board of directors of Music Teachers, Inc., has requested that a segmented income statement be peppred showing the contribution of each segment to the association. The association has four segments: isemberstup Division, Magazine Subscriptions Division, Books and Reports Division, and Continuing Education Division. Mike Doyle has been assigned responsibility for preparing the segmented income Gurenent, and he has gathered the following data: 2. The 20,000 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. b. A total of 2,500 one-year subscriptions to Teachers' Forum were also sold last year to nonmembers and libraries at $30 per subscription. In addition to subscriptions, the journal generated $100,000 in c. The costs to produce the Teachers' Forum magazine included $7 per subscription for printing and advertising revenues. paper and $4 per subscription for postage and shipping. d. A total of 28,000 technical reports and professional texts were sold by the Books and Reports Division at an average selling price per unit of $25. Average costs per publication were $4 for printing and a. The association offers a variety of continuing education courses to both members and nonmembers. paper and $2 for postage and shipping. The one-day courses had a tuition cost of $75 each and were attended by 2,400 students. A total of 1,760 students took two-day courses at a tuition cost of $125 for each student. Outside instructors were paid to teach some courses. I. Sala Personnel costs are 25% of salaries in the separate divisions as well as for the corporate staff. The $250,000 in occupancy costs (which can be allocated to segments based on their square feet occupied) includes $50,000 in rental cost for a warehouse used by the Books and Reports Division for storage 1. Printing and paper costs other than for magazine subscriptions and for books and reports relate to the purposes. Continuing Education Division. 1. General and administrative expenses include costs relating to overall administration of the association as a whole. The company's corporate staff does some mailing of materials for general administrative The expenses that can be traced or assigned to the corporate staff, as well as any other expenses purposes hat are not traceable to the segments, will be treated as common costs. It is not necessary to distinguish between variable and fixed costs. 1. Prepare a segmented income statement for Music Teachers, Inc. This statement should show the seg- Required: ment margin for each division as well as results for the association as a whole. 2. Give arguments for and against allocating all costs of the association to the four divisions. (CMA, adapted)