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pinkkurage pinkkurage
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University Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient.

​​DiagnosticOutpatientTotal
Revenue$500,000$400,000$900,000
Variable expenses​​​
  Product220,000 140,000360,000
  Selling and administrative  150,000   80,000 230,000
Contribution margin130,000 180,000310,000
Less fixed costs  180,000  125,000  305,000
Operating income($ 50,000)$  55,000$    5,000

The CEO of the hospital is not pleased with the division's performance, and he believes that the Diagnostic division is responsible for its dismal result and wants to consider outsourcing diagnostic procedures.

Required:

The controller has determined that the hospital's headquarters allocated $98,000 and $32,000 in common administrative fixed costs, respectively, to Diagnostic and Outpatient divisions. Prepare a segment margin income statement that will provide the CEO with a better basis for evaluating the two divisions' performance. Omit the heading.
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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Botox14Botox14
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A month ago
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Diagnostic: $180,000 − $98,000 = $82,000
Outpatient: $125,000 − $32,000 = $93,000

​​DiagnosticOutpatientTotal
Revenue$500,000$400,000$900,000
Variable expenses​​​
  Product220,000 140,000360,000
  Selling and administrative  150,000   80,000 230,000
Contribution margin130,000 180,000310,000
Less traceable fixed costs   82,000   93,000  175,000
Segment margin$  48,000$  87,000135,000
Common fixed costs​​  130,000
Net operating income​​$    5,000
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pinkkurage Author
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A month ago
Thanks
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You make an excellent tutor!
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I appreciate what you did here, answered it right Smiling Face with Open Mouth
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