Question

Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William...

Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketing and administrative duties. The remaining four employees work directly on operations. YAS has four service departments: managing, officiating, training, and dispute resolution. A time card is marked and records are kept to monitor the time each employee spends working in each department. When business is slow, there is idle time, which is marked on the time card. (It is necessary to have some idle time because some direct labor-hours must be available to accommodate fluctuating peak demand periods throughout the day and the week.)

Some of the July operating data are as follows:

Idle Time Managing Officiating Training Dispute Resolution
Sales revenue $ 7,550 $ 8,500 $ 3,600 $ 1,600
Direct labor (in hours) 20 350 110 155 120
Direct overhead traceable to departments
Equipment $ 1,010 $ 935 $ 760 $ 40
Supplies 260 360 310 260
Transportation 435 1,060 210 80

Other Data

  • The four employees working in the operating departments all make $14 per hour.
  • The fifth employee, who helps manage marketing and administrative duties, earns $2,550 per month, and William earns $3,300 per month.
  • Indirect overhead amounted to $1,208 and is assigned to departments based on the number of direct labor-hours used. Because there are idle hours, some overhead will not be assigned to a department.
  • In addition to salaries paid, marketing costs for items such as advertising and special promotions totaled $660.
  • In addition to salaries paid, other administrative costs were $255.
  • All revenue transactions are cash; all others are on account.
  • No inventories are kept.


Required:

Management wants to know whether each department is contributing to the company’s profit. Prepare an income statement for July that shows the revenue and cost of services for each department. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

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Answer #1

Refer the below images for the above mentioned question, in a detailed way of solution.

Solution : Income Statement Youth Athletic Services Income Statement for Month Ending July II Toral Training $3600 Dispute Reonly Managing and officiating are clearly profitable Training is losing a small amount of money. The problem is in Dispote R

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