Answer:
FRANCISCO Consulting Firm
Francisco Consulting Firm
Segmented Income Statement
For the month of July
Hospitals Physicians Nursing Total
Care
Sales $340,000 $205,000 $275,000 $820,000
Variable costs 255,000 133,250 192,500 580,750
Contribution margin ratio $85,000 $71,750 $82,500 $239,250
Direct fixed expenses of service $36,500 $8,500 $18,750 63,750
Allocated common
fixed service expenses 8,500 2,500 4,000 15,000
Unallocated common fixed service expense 6,850
Selling and administrative 29,190 17,600 23,610 70,400
Total expenses $74,190 $28,600 $46,360 $156,000
Net Income $10,810 $43,150 $36,140 $83,250
Explanation:
a) Data and Calculations:
CONSULTING FIRM
Income Statement
For Month of July
Sales $ 820,000
Less variable costs (580,750)
Contribution margin 239,250
Less fixed expenses Service $ 85,600
Selling and administrative 70,400 (156,000)
Net income $ 83,250
The sales, contribution margin ratios, and direct fixed expenses for the three types of services are as follows:
Hospitals Physicians Nursing
Care
Sales $340,000 $205,000 $275,000
Contribution margin ratio 25% 35% 30%
Direct fixed expenses of service $36,500 $8,500 $18,750
Allocated common fixed service expenses $8,500 $2,500 $4,000
