ch22 pt4

6 Williams Company began operations in January 2019 with two operating (selling) deportments and one service office department. Its departmental income statements follow WILLIAMS COMPANY Departent Income Statements Por Year Ended December 31, 2019 clock Mirror Combined Sales 5 155,000 $67,500 3222.500 Cout of goods sold 75.950 41,859 117.000 Groun profit 79.050 25,650 104,700 Direct expenses Sales salaries 20.250 7.000 27,250 Advertising 1.250 625 1,175 Stare supplies used 1.025 525 1,550 Depreciation Equipment 1,550 425 1,975 Total direct expenses 24.075 3,575 32,650 Allocated expenses Hent expense 7.020 3.70 10,000 Utilities expense 2.600 1,400 6,500 Share of office department expenses 10.500 4.500 15.000 Total allocated expenses 20.129 ,600 32.300 Total expenses 40.195 18,255 54.250 Net Income $ 34,555 7.395 39.750 Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $57,500 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,250: advertising, $925; store supplies 5625, and equipment depreciation, $325. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened, the new Painting department will fill one-fifth of the space presently used by the Clock department and one-fourth used by the Mirror department Management does not predict any Increase in utilities costs, which are allocated to the departments in proportion to occupied space for rent exponse). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the Painting department to Increase total office department expenses by $12,000. Since the Painting department will bring new customers into the store, management expects sales in both the clock and Mirror departments to increase by 8%. No changes for those departments gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales Required: Prepare departmental income statements that show the company's predicted results of operations for calendar year 2020 for the three operating (selling) departments and their combined totals. (Do not round Intermediate calculations. Round your final answers @ UN +00 6 7 8 9 0 W R P E 1 T Y O U F D G S . J K L s >