Clay Consulting Firm provides three types of client services in three health-car
ID: 2474339 • Letter: C
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 Less variable costs Contribution margin Less fixed expenses 900,000 (650,000) 250,000 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 300,000 25% $16,000 1,500 Sales $350,000 250,000 35% $20,000 18,000 Allocated common fixed service expenses 1,000 1,000 margin ratio 25% Direct fixed expenses of service Prepare income statements segmented by client categories. Include a column for the entire firm in the statement. Use negative signs with all answers relating to expenses and costs Clay Consulting Firm Product and Company Income Statements For the Month of July Company Totals Hospitals Physicians Nursing Care Sales Variable costs Contribution margin Direct fixed expenses Product margin Allocated common costs Product income Unallocated common expenses:Explanation / Answer
Clay Consulting Firm
Product and Company Income Statements
For the month of July
Particulars
Hospitals
Physicians
Nursing Care
Company Totals
Sales
350,000
250,000
300,000
900,000
variable Costs
262,500
162,500
225,000
650,000
Contribution Margin
87,500
87,500
75,000
250,000
Direct Fixed expenses
20,000
18,000
16,000
54,000
Product Margin
67,500
69,500
59,000
196,000
Allocated Common Costs
1,000
1,000
1,500
3,500
Product Income
66,500
68,500
57,500
192,500
Unallocated Common Expenses:
Selling and administrative
65,000
Service
12,500
Total
77,500
Net income
115,000
Variable cost= Sales – Sales x Contribution Margin Ratio
Common Service cost= Total service cost- direct fixed cost- Allocated fixed cost
=$65,000-(20,000+18,000+16,000)-(1,000+1,000+1,500+
=70,000- 54,000-3,500
=$12,500
Clay Consulting Firm
Product and Company Income Statements
For the month of July
Particulars
Hospitals
Physicians
Nursing Care
Company Totals
Sales
350,000
250,000
300,000
900,000
variable Costs
262,500
162,500
225,000
650,000
Contribution Margin
87,500
87,500
75,000
250,000
Direct Fixed expenses
20,000
18,000
16,000
54,000
Product Margin
67,500
69,500
59,000
196,000
Allocated Common Costs
1,000
1,000
1,500
3,500
Product Income
66,500
68,500
57,500
192,500
Unallocated Common Expenses:
Selling and administrative
65,000
Service
12,500
Total
77,500
Net income
115,000
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