Question

Jolly Cleaners offers residential and commercial cleaning services. Clients pay a fixed monthly fee for the service, but can cancel the service at the end of any month. In addition to the employees who do the actual cleaning the firm includes two managers who handle the administrative tasks (human resources, accounting, and so on) and one dispatcher, who assigns the cleaning employees to jobs on a daily basis On average, residential clients pay $300 per month for cleaning services and the commercial clients pay $1.900 per month. A typical residential client requires 10 hours a month for cleaning and a typical commercial client requires 50 hours a month. In March, Jolly Cleaners had 40 commercial clients and 180 residential clients. Cleaners are paid $15 per hour and are only paid for the hours actually worked. Supplies and other variable costs are estimated to cost $4 per hour of cleaning. Other monthly costs (all fixed) are $55,000 SG&A, including managerial and dispatcher salaries, and $3,500 in other expenses Jolly Cleaners has earned positive reviews on social media in the area and the managers expect to grow. For April, they forecast a 5 percent increase in residential clients and a 10 percent increase in commercial clients. Required: Prepare a budgeted income statement for Jolly Cleaners for April. (Round intermediate calculations to nearest whole number.)

Answer 1

JOLLY CLEANERS Budgeted Income Statement For the month of April Revenues: Commercial $83,600 Residential $56.700 Total Revenue $140,300 Expenses: Cleaner compensation $61,350 Supplies $16,360 SG&A $55,000 Other expenses $3,500 Total expenses $136.210 Income $4,090 Workings: Commercial client: 40+ (40 * 10%) = 44 clients = 44clients * $1,900 $83.600 Residential clients: 180 + (180 * 5%) = 189 clients = 189 clients * $300 $56,700 $33,000 Cleaner compensation: Commercial client (44 clients * 50 hours * $15 per hour) Residential clients (189 clients * 10 hours * $15 per hour) $28.350 $61,350 $8.800 Supplies: Commercial client (44 clients * 50 hours * $4 per hour) Residential clients (189 clients * 10 hours * $4 per hour) $7,560 $16,360