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The King and Smith Dental Clinic provides both preventive and orthodontic dental services. The two owners, Debra King and Mary Smith, operate the clinic as
The King and Smith Dental Clinic provides both preventive and orthodontic dental services. The two owners, Debra King and Mary Smith, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Debra for Preventive Services and Mary for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic. Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2022 is shown below. Service revenue Variable costs: Filling materials Novocain Supplies Dental assistant wages Utilities Total variable costs Fixed costs: Allocated portion of receptionist's salary Dentist salary Actual $40,360 4,970 4,030 2,000 2,410 550 13,960 3,170 10,060 Difference fro
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