Question

Income Statements Segmented by Products

Clay Consulting Firm provides three types of client services in three health-care-related industries. The income statement for July is as follows:

Clay Consulting Firm Income Statement For Month of July

Sales

$900,000

Less Variable costs

(601,000)

Contribution Margin

299,000

Less fixed expenses

Service

70,000

Selling and administrative

65,000

(135,000)

Net income

$164,000

The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows:

	Hospitals	Physicians	Nursing Care
Sales	$310,000	$290,000	$300,000
Contribution margin ratio	30%	40%	30%
Direct fixed expenses of services	$18,000	$21,000	$13,000
Allocated common fixed service expenses	$1,000	$1,000	$1,500

Prepare income statements segmented by client categories. Include a column for the entire firm in the statement.

Do not use negative signs with your answers.

		Physicians	Nursing Care	Company totals
Sales
Variable costs
Contribution margin
Direct fixed expenses
Product margin
Allocated common costs
Product income

Unallocated common expenses:

Selling and administrative ........................................

Service (less direct fixed expenses and allocated common costs) ....................................

Total ...........................................

Net income .............................

Answer 1