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Case 6-30 Service Organization; Segment Reporting (L06-4) Music Teachers, Inc., is an educational association for music teachers that has 20,100 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. $3,382,200 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 952,000 238,000 229,000 520.000 500,000 322,000 168,000 73,000 37.000 3,039,000 $ 343, 200 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 20,100 members of the association pay dues of $100 per year, of which $20 covers a one-year subscription to the Teachers' Forum Other henefits include membershin in the association and chanter affiliation The nortion of the dues rovering the < Prev 3 of 3 !! Next PO O RTSOAIO pm

Answer 1

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Particulars	Total	Membership	Magazine	Books and Reports	Continuing Education		Working-1	Revenue	Membership	Magazine	Total
Revenue:								Total Member			20,100
Membership Due (working-1)	$      2,010,000	$      1,608,000	$      402,000					Per Unit Price	$                    80	$                                 20	$                                              100
Non Member (3,700*$36)	$         133,200		$      133,200					Total Revenue	$      1,608,000	$                      402,000	$                                  2,010,000
Advertising	$         109,000		$      109,000
Reports & Texts 28,500*$25	$         712,500			$                    712,500
Continuing Education	$         417,500				$                         417,500
							Working-2	Salary and Personnel Cost
Total Revenue (Given in Question)	$      3,382,200	$      1,608,000	$      644,200	$                    712,500	$                         417,500				Salary	Personnel Cost
										25% of Salary
Expenses tracable to Segment:								Membership	$         211,000	$                         52,750
								Magazine Subs	$         152,000	$                         38,000
Salaries (working-2)	$         865,000	$         211,000	$      152,000	$                    302,000	$                         200,000			Books and Reports	$         302,000	$                         75,500
Personnel Cost (working-2)	$         216,250	$            52,750	$        38,000	$                      75,500	$                            50,000			Continuing Education	$         200,000	$                         50,000
Occupancy Cost (working-3)	$         178,300	$            50,700	$        16,900	$                      76,900	$                            33,800			Corporate Staff	$            87,000	$                         21,750
Reimbursment of members cost to local	$         520,000	$         520,000							$         952,000	$                      238,000
Other membership Service	$         500,000	$         500,000
Printing and Paper (Working-4)	$         322,000		$      214,200	$                    114,000	$                            -6,200		Working-3	Occupancy Cost
Postage and Shipping (working-4)	$         152,200		$        95,200	$                      57,000
Instructors Fee	$            73,000				$                            73,000				Space	Allocation based on Space ($229,000-$60,000)=$169,000	Direct Allocation ($60,000)	Total
								Membership	3,000	$                         50,700		$                  50,700
Total Traceable Expenses	$      2,826,750	$      1,334,450	$      516,300	$                    625,400	$                         350,600			Magazine Subs	1,000	$                         16,900		$                  16,900
Division Segment Margin	$         555,450	$         273,550	$      127,900	$                      87,100	$                            66,900			Books and Reports	1,000	$                         16,900	$                                        60,000	$                  76,900
								Continuing Education	2,000	$                         33,800		$                  33,800
Common Expenses NOT tracable to Segment:								Corporate Staff	3,000	$                         50,700		$                  50,700
									10,000	$                      169,000	$                                        60,000	$                229,000
Salaries (working-2)-Corporate Staff	$            87,000
Personnel Cost (working-2)-Corporate Staff	$            21,750
Occupancy Cost (working-3)-Corporate Staff	$            50,700						Working-4	Printing and Paper
Postage and Shipping (working-4)-Corporate Staff	$            15,800									Per Unit	Total Paper	Per Unit Postage	Total Postage
General Admin exp	$            37,000							Membership
Common Expenses NOT tracable to Segment:	$         212,250							Magazine Subs	23,800	$                                   9	$                                     214,200	$                             4	$           95,200
								Books and Reports	28,500	$                                   4	$                                     114,000	$                             2	$           57,000
Excess of revenues over expense (Margin- Untraceable Exp)	$         343,200							Continuing Education (Total-books-Subs)			$                                        -6,200
								Corporate Staff (Total-books-Subs)					$           15,800
											$                                     322,000		$         168,000