Clay Consulting Firm provides three types of client services in three health-car

Question

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

115000

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

16000

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

SALES 900000 LESS VARIABLE COSTS -650000 CONTRIBUTION MARGIN 250000 LESS FIXED EXPENSES SERVICE 70000 SELLING AND ADMINISTRATIVE 65000 -135000 NET INCOME

115000

Explanation / Answer

HOSPITALS PHYSICIANS NURSING CARE Total SALES 350000 250000 300000 900000 LESS VARIABLE COSTS 262500 162500 225000 650000 CONTRIBUTION MARGIN 87500 87500 75000 250000 DIRECT FIXED EXPENSES OF SERVICE 20000 18000 16000 54000 ALLOCATED COMMON FIXED SERVICE EXPENSES 1000 1000 1500 3500 NET INCOME 66500 68500 57500 192500 HOSPITALS 350000 x 25% 87500 PHYSICIANS 250000 x 35% 87500 NURSING CARE 300000 x 25% 75000

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