Music Teachers, Inc., is an educational association for musicteachers that has 20,000 members. The association operates from acentral headquarters but has local membership chapters throughoutthe United States. Monthly meetings are held by the local chaptersto discuss recent developments on topics of interest to musicteachers. The association's journal, Teachers' Forum, is issuedmonthly with features about recent developments in the field. Theassociation publishes books and reports and also sponsorsprofessional courses that qualify for continuing professionaleducation credit. The association's statement of revenues andexpenses for the current year is presented below.
Revenues $3,275,000
Expenses:
Salaries 920,000
Personnel costs 230,000
Occupancy costs 280,000
Reimbursement of member costs to local chapters. 600,000
Other membershipservices 500,000
Printing andpaper 320,000
Postage andshipping 176,000
Instructors'fees 80,000
General and administrative 38,000
Totalexpenses 3,144,000
Excess of revenues over expenses . $ 131,000
The board of directors of Music Teachers, Inc., has requested thata segmented income statement be prepared showing the contributionof each profit center to the association. The association has fourprofit centers: Membership Division. Magazine SubscriptionsDivision. Books and Reports Division, and Continuing EducationDivision. Mike Doyle has been assigned responsibility for preparingthe segmented income statement, and he has gathered the followingdata prior to its preparation.
a. Membership dues are $100 per year, of which $20 is considered tocover a one-year subscription to the association's journal. Otherbenefits include membership in the association and chapteraffiliation. The portion of the dues covering the magazinesubscription ($20) should be assigned to the Magazine SubscriptionDivision.
b. One-year subscriptions to Teachers' Forum were sold tononmembers and libraries at $30 per subscription. A total of 2,500of these subscriptions were sold last year. In addition tosubscriptions, the magazine generated $100,000 in advertisingrevenues. The costs per magazine subscription were $7 for printingand paper and $4 for postage and shipping.
c. A total of 28,000 technical reports and professional texts weresold by the Books and Reports Division at an average unit sellingprice of $25. Average costs per publication were $4 for printingand paper and $2 for postage and shipping.
d. The association offers a variety of continuing education coursesto both members and nonmembers. The one-day courses had a tuitioncost of $75 each and were attended by 2,400 students. A total of1.760 students took two-day courses at a tuition cost of $125 foreach student. Outside instructors were paid to teach somecourses.
e. Salary costs and space occupied by division follow:
Salaries / Space Occupied(square feet)
Membership $210,000 / 2,000
Magazine Subscriptions 150,000 / 2,000
Books and Reports 300,000 / 3,000
Continuing Education 180,000 / 2,000
Corporate staff 80,000 / 1,000
Total $920,000 / 10,000
Personnel costs are 25% of salaries in the separate divisions aswell as for the corporate staff. The $280,000 in occupancy costsincludes $50.000 in rental cost for a warehouse used by the Booksand Reports Division for storage purposes.
f. Printing and paper costs other than for magazine subscriptionsand for books and reports relate to the Continuing EducationDivision.
g. General and administrative expenses include costs relating tooverall administration of the association as a whole. The company'scorporate staff does some mailing of materials for generaladministrative purposes. The expenses that can be traced orassigned to the corporate staff, as well as any other expenses thatare not traceable to the profit centers, will be treated as commoncosts. It is not necessary to distinguish between variable andfixed costs.
Required:
1. Prepare a contribution format segmented income statement forMusic Teachers. Inc. This statement should show the segment marginfor each division as well as results for the association as awhole
Music Teachers, Inc., is an educational association for musicteachers that has 20,000 members. The association operates from acentral headquarters but has local membership chapters throughoutthe United States. Monthly meetings are held by the local chaptersto discuss recent developments on topics of interest to musicteachers. The association's journal, Teachers' Forum, is issuedmonthly with features about recent developments in the field. Theassociation publishes books and reports and also sponsorsprofessional courses that qualify for continuing professionaleducation credit. The association's statement of revenues andexpenses for the current year is presented below.
Revenues $3,275,000
Expenses:
Salaries 920,000
Personnel costs 230,000
Occupancy costs 280,000
Reimbursement of member costs to local chapters. 600,000
Other membershipservices 500,000
Printing andpaper 320,000
Postage andshipping 176,000
Instructors'fees 80,000
General and administrative 38,000
Totalexpenses 3,144,000
Excess of revenues over expenses . $ 131,000
The board of directors of Music Teachers, Inc., has requested thata segmented income statement be prepared showing the contributionof each profit center to the association. The association has fourprofit centers: Membership Division. Magazine SubscriptionsDivision. Books and Reports Division, and Continuing EducationDivision. Mike Doyle has been assigned responsibility for preparingthe segmented income statement, and he has gathered the followingdata prior to its preparation.
a. Membership dues are $100 per year, of which $20 is considered tocover a one-year subscription to the association's journal. Otherbenefits include membership in the association and chapteraffiliation. The portion of the dues covering the magazinesubscription ($20) should be assigned to the Magazine SubscriptionDivision.
b. One-year subscriptions to Teachers' Forum were sold tononmembers and libraries at $30 per subscription. A total of 2,500of these subscriptions were sold last year. In addition tosubscriptions, the magazine generated $100,000 in advertisingrevenues. The costs per magazine subscription were $7 for printingand paper and $4 for postage and shipping.
c. A total of 28,000 technical reports and professional texts weresold by the Books and Reports Division at an average unit sellingprice of $25. Average costs per publication were $4 for printingand paper and $2 for postage and shipping.
d. The association offers a variety of continuing education coursesto both members and nonmembers. The one-day courses had a tuitioncost of $75 each and were attended by 2,400 students. A total of1.760 students took two-day courses at a tuition cost of $125 foreach student. Outside instructors were paid to teach somecourses.
e. Salary costs and space occupied by division follow:
Salaries / Space Occupied(square feet)
Membership $210,000 / 2,000
Magazine Subscriptions 150,000 / 2,000
Books and Reports 300,000 / 3,000
Continuing Education 180,000 / 2,000
Corporate staff 80,000 / 1,000
Total $920,000 / 10,000
Personnel costs are 25% of salaries in the separate divisions aswell as for the corporate staff. The $280,000 in occupancy costsincludes $50.000 in rental cost for a warehouse used by the Booksand Reports Division for storage purposes.
f. Printing and paper costs other than for magazine subscriptionsand for books and reports relate to the Continuing EducationDivision.
g. General and administrative expenses include costs relating tooverall administration of the association as a whole. The company'scorporate staff does some mailing of materials for generaladministrative purposes. The expenses that can be traced orassigned to the corporate staff, as well as any other expenses thatare not traceable to the profit centers, will be treated as commoncosts. It is not necessary to distinguish between variable andfixed costs.
Required:
1. Prepare a contribution format segmented income statement forMusic Teachers. Inc. This statement should show the segment marginfor each division as well as results for the association as awhole
