Refer to the data in Exercise 13-26.

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 sub-

,scriber should decrease by an estimated 20 percent. The following information is available for iui costs incurred in August. All costs except depreciation are paid in cash.

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.

Data from in Exercise 13-26

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 iui season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow:

The average price charged for a service call is $50. 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.

Required Prepare a budgeted income statement for September.

Transcribed Image Text:

Service costs Variable costs $23,600 Maintenance and repair 21,000 Depreciation (fixed). 11,000 Total.. $55,600 Marketing and administrative costs Marketing (variable) $12,500 Administrative (fixed) 11,500 Total $24,000 Total costs $79,600