Problem

Custodian Commandos, Inc., provides janitorial services to public school systems. The busi...

Custodian Commandos, Inc., provides janitorial services to public school systems. The business ad justs its accounts monthly, but closes them only at year-end. Its fiscal year ends on December 31.

A summary of the company’s total revenue and expenses at the end of five selected months is as follows:

 

Total

Revenue

Total Expenses

March 31

$ 69,000

$ 48,000

June 30

129,000

90,000

August 31

134,000

115,000

September 30

159,000

130,000

December 31

249,000

175,000

a. Rank the company’s fiscal quarters from most profitable to least profitable.


b. Compute the company’s income for the month of September.


c. Compute the company’s net income (or loss) for the first two months of the third quarter. Provide a possible explanation why profitability for the first two months of the third quarter differs significantly from profitability achieved in the third month of the quarter (as computed in part b).

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