Question

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		(650,000)
Contribution margin		250,000
Less fixed expenses
Service	$ 70,000
Selling and administrative	65,000	(135,000)
Net income		$ 115,000

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

	Hospitals	Physicians	Nursing Care
Sales	$ 350,000	$ 250,000	$ 300,000
Contribution margin ratio	25%	35%	25%
Direct fixed expenses of service	$ 20,000	$ 18,000	$ 16,000
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.

Clay Consulting Firm Product and Company Income Statements For the Month of July
	Hospitals	Physicians	Nursing Care	Company Totals
Sales	$Answer	$Answer	$Answer	$Answer
Variable costs	Answer	Answer	Answer	Answer
Contribution margin	Answer	Answer	Answer	Answer
Direct fixed expenses	Answer	Answer	Answer	Answer
Product margin	Answer	Answer	Answer	Answer
Allocated common costs	Answer	Answer	Answer	Answer
Product income	$Answer	$Answer	$Answer	Answer
Unallocated common expenses:
Selling and administrative				Answer
Service (less direct fixed expenses and allocated common costs)				Answer
Total				Answer
Net income				$Answer

Answer 1

	Clay Consulting Firm
	Product and Company Income Statements
	For the Month of July
		Hospitals	Physicians	Nursing Care	Company Totals
	Sales	350000	250000	300000	900000
	Variable costs:	262500	162500	225000	650000	(Sales-Contibution Margin)
	Contribution margin	87500	87500	75000	250000	(Sales*Contribution Ratio)
	Direct fixed expenses	20000	18000	16000	54000
	Product margin	67500	69500	59000	196000
	Allocated common costs	1000	1000	1500	3500
	Product income	66500	68500	57500	192500
	Unallocated common expenses:
	Selling and administrative				65000
	Service (less direct fixed expenses and allocated common costs)				12500	(70000-54000-3500)
	Total				77500
	Net income				115000