Varmit-B-Gone is a
pest control service that operates in a suburban neighborhood. The
company attempts to make service calls at least once a month to all
homes that subscribe to its service. It makes more frequent calls
during the summer. The number of subscribers also varies with the
season. The number of subscribers and the average number of calls
to each subscriber for the months of interest follow:
Subscribers | Service calls (per subscriber) | |||||
March | 600 | 0.6 | ||||
April | 700 | 0.9 | ||||
May | 1,400 | 1.5 | ||||
June | 1,600 | 2.5 | ||||
July | 1,600 | 3.0 | ||||
August | 1,500 | 2.4 | ||||
The average price charged for a service call is $80. Of the service
calls, 30 percent are paid in the month the service is rendered, 60
percent in the month after the service is rendered, and 8 percent
in the second month after. The remaining 2 percent is
uncollectible.
Varmit-B-Gone
estimates that the number of subscribers in September should fall
10 percent below August levels, and the number of service calls per
subscriber should decrease by an estimated 20 percent. The
following information is available for costs incurred in August.
All costs except depreciation are paid in cash.
Service costs | ||
Variable costs | $ | 24,000 |
Maintenance and repair | 22,000 | |
Depreciation (fixed) | 42,000 | |
Total | $ | 88,000 |
Marketing and administrative costs | ||
Marketing (variable) | $ | 14,500 |
Administrative (fixed) | 55,000 | |
Total | $ | 69,500 |
Total costs | $ | 157,500 |
Variable service and marketing costs change with volume. Fixed
depreciation will remain the same, but fixed administrative costs
will increase by 5 percent beginning September 1. Maintenance and
repair are provided by contract, which calls for a 1 percent
increase in September.
Required:
Prepare a budgeted income statement for September. (Do not round intermediate calculations.)
Varmit-B-Gone Budgeted Income Statement For The Month Of September |
|
Revenue [(1,500-10%)1,350*1.92 (2.4-20%)]2592* $80 | $207,360 |
Less:Service cost: | |
Variable cost (24,000/3600 (1500*2.4) * 2592 | 17280 |
Maintenance and repair (22,000+1%) | 22,220 |
Depreciation (fixed) | 42,000 |
Total | 81,500 |
Marketing and administrative costs: | |
Marketing (variable) (14,500/3600*2592) | 10,440 |
Administrative (fixed) (55,000+5%) | 57,750 |
Total | 68,190 |
Total cost | 149,690 |
Net income | $57,670 |
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to...
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: Subscribers Service calls (per subscriber) March 1,250 0.6 April 1,350 0.9 May...
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: Subscribers Service calls (per subscriber) March 400 0.6 April 600 0.9 May...
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: Service calls (per subscriber) 0.6 0.9 1.6 Subscribers 450 700 1,450 1,450...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.06 Maintenance $ 0.30 Wages and salaries $ 4,000 $ 0.30 Depreciation $ 8,100 Rent $ 2,100 Administrative expenses $ 1,600 $ 0.04 For example, electricity costs are $1,200 per month plus $0.06 per car washed. The...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Fixed Cost per Month $ 1,300 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $ 0.60 $ 0.09 $ 0.30 $ 0.20 $ 4,500 $ 8,100 $ 1,900 $ 1,600 $ 0.84 For example, electricity costs are $1,300 per month plus $0.09 per car washed. The...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Fixed Cost per Month Cost per Car Washed $ 0.70 $ 0.07 $ 0.15 $ 0.30 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,000 $ 4,600 $ 8,200 $ 2,200 $ 1,600 $ 0.03 For example, electricity costs are $1,000 per month plus $0.07 per car washed. The company...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Fixed Cost per Month Cost per Car Washed $0.60 $ 0.06 $ 0.10 $ 0.40 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,300 $4,200 $8, 100 $1,900 $1,600 $ 0.04 For example, electricity costs are $1,300 per month plus $0.06 per car washed. The company actually washed 8,400 cars...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs Fixed Cost per Month Cost per Car Washed Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $0.70 $ 0.09 $0.20 $ 0.20 $1,300 $4,500 $ 8,400 $2,100 $1,600 $ 0.02 For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company actually washed 8,400 cars in...
CH9ALG1 \ Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Fixed Cost per Month $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.60 $ 0.08 $0.20 $ 0.20 $4,200 $8,200 $1,900 $1,400 $ 0.02 For example, electricity costs are $1,200 per month plus $0.08 per car washed. The company expects to wash 8,000...
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs Fixed Cost per Month Cost per Car Washed $0.50 $0. B $0.15 $0.40 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,000 $4,500 $8,200 $1,900 $1,600 $0.02 For example, electricity costs are $1,000 per month plus $0.08 per car washed. The company expects to wash 8.200 cars in August and...