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You have been given data on the transactions (samples) conducted by Martin Diagnostics at their...

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Accounting

You have been given data on the transactions (samples) conducted by Martin Diagnostics at their multiple locations for the first six months of 2019. Martin Diagnostics has main offices in Florence and Inglewood, branch offices in Tampa and Tullahoma, and satellite offices in Fresno and MicroPath Analytics. Administrative costs are $15,000 per month for main offices, $5,000 per month for branch offices, and $750 per month for satellite offices. Variable processing costs are $2.50 per transaction at main offices, $4.00 per transaction at branch offices, and $6 per transaction at satellite offices. In addition, Martin Diagnostics licenses the Fleming technology for $480,000 per year and has the capacity to perform 12,000 tests using Fleming technology. California taxes diagnostic services at 5% of pretax income, while Tennessee and Florida have no income tax on diagnostic services.

Assignment:

  1. Create an income statement, assigning costs to offices and transactions as appropriate.
  2. Evaluate the profitability of each procedure using a variable costing approach, for the entire period presented. Any recommendations?

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