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a. Compute the unit prodatement for Year 1, Year 2, and Yeat 5 . CASE LO7-4 Music Teachers, Inc., is an educational association for music teachers that has 20,000 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. (continued) Variable Costing ande. telument, and he bas gathered the following dase Mazuibe Subscription Division atrerising revenues. precr and 44 per subseription for portage atd hippione L.760 xudents sook tho didy concicis t Silury costs and spoce octupied by divilion followi Chan iake and paper conts other th 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FiFO meaco in first-out. In other words, it assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2 , and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 2. Asume the company uses variable costing and a LIFO inventory flow assumption (LIFO meacos tent first-out. In other words, it assumes that the newest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FiF0 mee: first-in first-out. In other words, it assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO Meat last-in first-out. In other words, it assumes that the newest units in inventory are sold first: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. CASE 1074 Music Teachers, Inc., is an educational association for music teachers that has 20,000 memben. ine association operates from a central headquarters but has local membership chapters througbice ite United States. Monthly meetings are held by the local chapters to discuss recent developmens on ap ics of interest to music teachers. The association's magazine, Teachers' Fonm, is issued monthy wat features about recent developments in the field. The association publishes books and reports and ab sponsors professional courses that qualify for continuing professional education credit. The associsiati statement of revenues and expenses for the current year is presented below. whation Divition. Mike. Doyle bas been assigned responsibility for preparing the segmented income warmenit, ard he las gathered the folliwing data: 1. Te 2li,000 members of the ussociation pay daes of $100 per year, of which $20 covers a one-year sub. kigtica to the Teachers' Foram, Other benefits include membership in the association and chapes anihition. The portion of the dues covering the magazine subscription ($20) should be assigned to the Magurat Subscriptions Division. A shat of 2500 one-year subseriptions to Teachien' Forum were also sold last year so nonmeribers and libraries at $30 per sabseription. In additson to subseriptions, the joumal generated 5100,000 in Wertising reventues. The costs to produce the Teachers' Formun magarine included $7 per subscription for printing and guper nod 34 per subscripaion for postage and shipping. L. k weat of 28,000 techanical reports and protessional texts were sold by the Books and Reports DiviWine w an merage relling price per unit of $25. Avertge costs per publication were $4 for printing and peperapd $2 for postage and shipping. te The asweiation offers a varicty of continuing edacution courses to both members and nonmembers. The one day courses had a tuition cost of $75 esth and were aftended by 2,400 stodents. A toeal of 1,760 students took two-duy courses at a tuition cost of si25 for each student. Ousside instructors were patid to teach some courses. 1. salery conts and spsce occupied by division follown Penoenel costs are 25% of salaries in the separate divisions as well as for the corporate staff. The low 900 in occupaney costs (whicb can be allocated to segments based on their segare foet occupied) Beldeds in occupaney covs (which can be allocated to segments based on their sengare fect occupied) isposet. if Phatiog and paper costs other than for magarine subestipcions and for books and report relate to the General und adrsinistrative expenses include costs zelating to overall administation of the assaciatioe as a whole. The company's corporate staff does some mailing of materials for geberal admiaistrative purpeser. The expenses that can be traced or assigned to the corporate staff, as well as any ocher expenses Thated: hegouc a segmented income statemcnt for Music Teachers, loe. This satement should show the seg2. there margin for each division as well as results for the asociation as a w bole. Gre iaggin for each division as well as restils for the aswectation as a whote. (CMA. adipted) CASE LO7-4 Music Teachers, Inc., is an educational association for music teachers that has 20,000 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 lop. ics 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. (continued) The board of directors of Music Teachers, Inc., has requested that a segmented income statement be peppred showing the contribution of each segment to the association. The association has four segments: isemberstup Division, Magazine Subscriptions Division, Books and Reports Division, and Continuing Education Division. Mike Doyle has been assigned responsibility for preparing the segmented income Gurenent, and he has gathered the following data: 2. The 20,000 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 2,500 one-year subscriptions to Teachers' Forum were also sold last year to nonmembers and libraries at $30 per subscription. In addition to subscriptions, the journal generated $100,000 in c. The costs to produce the Teachers' Forum magazine included $7 per subscription for printing and advertising revenues. paper and $4 per subscription for postage and shipping. d. A total of 28,000 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 a. The association offers a variety of continuing education courses to both members and nonmembers. paper and $2 for postage and shipping. The one-day courses had a tuition cost of $75 each and were attended by 2,400 students. A total of 1,760 students took two-day courses at a tuition cost of $125 for each student. Outside instructors were paid to teach some courses. I. Sala Personnel costs are 25% of salaries in the separate divisions as well as for the corporate staff. The $250,000 in occupancy costs (which can be allocated to segments based on their square feet occupied) includes $50,000 in rental cost for a warehouse used by the Books and Reports Division for storage 1. Printing and paper costs other than for magazine subscriptions and for books and reports relate to the purposes. Continuing Education Division. 1. General and administrative expenses include costs relating to overall administration of the association as a whole. The company's corporate staff does some mailing of materials for general administrative The expenses that can be traced or assigned to the corporate staff, as well as any other expenses purposes hat are not traceable to the segments, will be treated as common costs. It is not necessary to distinguish between variable and fixed costs. 1. Prepare a segmented income statement for Music Teachers, Inc. This statement should show the seg- Required: ment margin for each division as well as results for the association as a whole. 2. Give arguments for and against allocating all costs of the association to the four divisions. (CMA, adapted)