Question

Music Teachers, Inc., is an educational association for music teachers that has 19,600 members. The association operates from a central headquarters but has local membership chapters throughout the United States. Monthly meetings are held by the local chapters to discuss recent developments on topics of interest to music teachers. The association's magazine, Teachers' Forum, is issued monthly with features about recent developments in the field. The association publishes books and reports and also sponsors professional courses that qualify for continuing professional education credit. The association's statement of revenues and expenses for the current year is presented below. $3,292,700 Music Teachers, Inc. Statement of Revenues and Expenses For the Year Ended November 30 Revenues Expenses : Salaries Personnel costs Occupancy costs Reimbursement of member costs to local chapters Other membership services Printing and paper Postage and shipping Instructors' fees General and administrative Total expenses Excess of revenues over expenses 963,000 240, 750 232,000 520,000 540,000 330,000 198,000 71,000 33,000 3,127,750 $ 164,950 The board of directors of Music Teachers, Inc., has requested that a segmented income statement be prepared showing the contribution of each segment to the association. The association has four segments: Membership Division, Magazine Subscriptions Division, Books and Reports Division, and Continuing Education Division. Mike Doyle has been assigned responsibility for preparing the segmented income statement, and he has gathered the following data: a. The 19,600 members of the association pay dues of $100 per year, of which $20 covers a one-year subscription to the Teachers' Forum Other benefits include membership in the association and chapter affiliation. The portion of the dues covering the magazine subscription ($20) should be assigned to the Magazine Subscriptions Division. b. A total of 2,700 one-year subscriptions to Teachers' Forum were also sold last year to nonmembers and libraries at $36 per subscription. In addition to subscriptions, the journal generated $108,000 in advertising revenues. c. The costs to produce the Teachers' Forum magazine included $8 per subscription for printing and paper and $4 per subscription for postage and shipping. d. A total of 28,300 technical reports and professional texts were sold by the Books and Reports Division at an average selling price per unit of $25. Average costs per publication were $4 for printing and paper and $2 for postage and shipping. e. The association offers a variety of continuing education courses to both members and nonmembers. The one-day courses had a tuition cost of $75 each and were attended by 2,500 students. A total of 1,860 students took two-day courses at a tuition cost of $125 for each student. Outside instructors were paid to teach some courses. f. Salary costs and space occupied by division follow: Membership Magazine Subscriptions Books and Reports Continuing Education Corporate staff Total Salaries $ 215,000 156,000 310,000 184,000 98,000 $ 963,000 Space Occupied (square feet) 3,000 1,000 1,000 2,000 3,000 10,000

Answer 1

Music Teachers Inc.
Segmented Income Statement
For the Year Ended November 30
		Division
	Working Notes	Association Total	Membership	Magazine Subscriptions	Books & Reports	Continuing Education
		$	$	$	$	$
Sales
Membership Dues		19,60,000	15,68,000	3,92,000
Non-member journal subscriptions		97,200		97,200
Advertising		1,08,000		1,08,000
Reports and Texts	W1	7,07,500			7,07,500
Continuing education courses	W2	4,20,000				4,20,000
Total Revenues		32,92,700	15,68,000	5,97,200	7,07,500	4,20,000
Expenses traceable to segments:-
Printing and Paper		3,30,000		1,78,400	1,13,200	38,400
Postage and shipping	W3	1,98,000		89,200	56,600	52,200
Salaries		8,65,000	2,15,000	1,56,000	3,10,000	1,84,000
Personnel Costs(25% of salaries)		2,16,250	53,750	39,000	77,500	46,000
Occupancy costs	W4	1,78,600	53,400	17,800	71,800	35,600
Instructors' fees		71,000				71,000
Total traceable expenses		18,58,850	3,22,150	4,80,400	6,29,100	4,27,200
Excess of revenue over expenses		14,33,850	12,45,850	1,16,800	78,400	-7,200
Common expenses not traceable to divisions:-
Salaried to Corporate Staff		98,000
Personnel costs to Corporate Staff(25% of Corporate Staff Salaries)		24,500
Occupancy costs to Corporate Staff		53,400
Reimbursement of member costs to local chapters		5,20,000
Other membership services		5,40,000
General and Administrative		33,000
Total common expeses		12,68,900
Total Excess of revenue over expenses		1,64,950
Working Notes:-
1. Sales of Reports and Texts
Sale	7,07,500
(28300 reports sold for an avergae selling price of $25)
Costs of printing and paper	1,13,200
(28300 reports at a cost of $4 per report)
Costs of postage and shipping	56,600
(28300 reports at a cost of $2 per report)
2. Continuing Education Courses
Sale
- One day course(2500 students at $75 each)	1,87,500
- Two day course(1860 students at $125 each)	2,32,500
Total	4,20,000
3. Postage and shipping
Membership	-
Magazine Subscription	89,200
Books & Reports	56,600
Continuing Education	52,200	Balancing figure
Total	1,98,000
4.Occupancy costs
	Association Total	Membership	Magazine Subscriptions	Books & Reports	Continuing Education	Corporate Staff
Space occupied(square feet)	10,000	3,000	1,000	1,000	2,000	3,000
Total Occupancy Costs	2,32,000
Occupancy rental cost for a warehouse				54,000
Balance occupancy costs to be allocated based on space occupied($232,000-54,000)	1,78,000	53,400	17,800	17,800	35,600	53,400
Total Occupancy Costs	2,32,000	53,400	17,800	71,800	35,600	53,400