Question

ncome Statements Segmented by Products Francisco Consulting Firm provides three types of client services in three health-care-related industries. The income statement for July is as follows: FRANCISCO CONSULTING FIRM Income Statement For Month of July Sales $ 820,000 Less variable costs (580,750) Contribution margin 239,250 Less fixed expenses Service $ 85,600 Selling and administrative 70,400 (156,000) Net income $ 83,250 The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows: Hospitals Physicians Nursing Care Sales $340,000 $205,000 $275,000 Contribution margin ratio 25% 35% 30% Direct fixed expenses of service $36,500 $8,500 $18,750 Allocated common fixed service expenses $8,500 $2,500 $4,000 Prepare income statements segmented by client categories. Include a column for the entire firm in the statement.

Answer 1

FRANCISCO Consulting Firm

Francisco Consulting Firm

Segmented Income Statement

For the month of July

Hospitals Physicians Nursing Total

Care

Sales $340,000 $205,000 $275,000 $820,000

Variable costs 255,000 133,250 192,500 580,750

Contribution margin ratio $85,000 $71,750 $82,500 $239,250

Direct fixed expenses of service $36,500 $8,500 $18,750 63,750

Allocated common

fixed service expenses 8,500 2,500 4,000 15,000

Unallocated common fixed service expense 6,850

Selling and administrative 29,190 17,600 23,610 70,400

Total expenses $74,190 $28,600 $46,360 $156,000

Net Income $10,810 $43,150 $36,140 $83,250

Step-by-step explanation:

a) Data and Calculations:

CONSULTING FIRM

Income Statement

For Month of July

Sales $ 820,000

Less variable costs (580,750)

Contribution margin 239,250

Less fixed expenses Service $ 85,600

Selling and administrative 70,400 (156,000)

Net income $ 83,250

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

Hospitals Physicians Nursing

Care

Sales $340,000 $205,000 $275,000

Contribution margin ratio 25% 35% 30%

Direct fixed expenses of service $36,500 $8,500 $18,750

Allocated common fixed service expenses $8,500 $2,500 $4,000