Sorry for the crummy picture, but the question is fairly long. It starts from the bottom left, then bottom right and finishes with the top section.
The $280,000 in occupancy costs includes $50,000 in rental cost for a warehouse used by the Books and Reports Division for storage purposes f. Printing and paper costs other than for magazine subscriptions and for books and reports relate to the Continuing Education Division. g. 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 purposes. The expenses that can be traced or assigned to the corporate staff, as well as any other expenses that are not traceable to the segments, will be treated as common costs. It is not necessary to distinguish between variable and fixed costs Required 1. Prepare a contribution format segmented income statement for Music Teachers, Inc. This statement should show the segment 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 Probler Service Organization, Segment Reporting Bookmark 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 topics of interest to music teachers. The association's jounal, 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 qualifty for continuing professional education credit. The association's statement of revenues and expenses for the current year is presented below 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 1 a Membership dues are $100 per year, of which $20 is considered to cover a one -year subscription to the association's journal. Other benenits include membership in the association and chapter affiiation. 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 2,500 of these subscriptions were sold last year In addition to subscripbons, the magazine generated $100,000 in advertising revenues. The costs per magazine subscription were $7 for printing and paper and $4 for postage and shipping c. A total of 28,000 technical reports and professional texts were sold by the Books and Reports Division at an average unit selling price or $25. Average costs per publication were $4 for printing and paper and $2 for postage and shipping d. The assoclation 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 2,400 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 Muskc Teachers, Inc. Statement of Revenues and Expenses For the Year Ended November 30 $3.276,000 Experses Personnel costs Occupency costs Reimbursement of member costs to kocal dhapters Orher membership services. Prring and paper Postage and shipping 920,000 230,000 200,000 600.000 500,000 320,000 176,000 General and administrative 8,000 3,144,000 e. Salary costs and space occupied by division follow Expess of revenues over experies, $ 131.000 The board of directors of Music Teachers, inc., has requested that a segmented income statemem be prepared showing the contribution of each segment to the association The Salaries Space Occupled $210.000 150,000 s Division, Books Books and Reports Corporate staff $920,000 Personnel costs are 25% of salaries in the separate divisions as well as for the corporate staff The 5280,000 in occupancy costs includes s50,000 in rental cost for a warehouse used by the
