Chapter 24 Performance Measurement and Responsibility Accounting mont began operations in January 2019 with two operating (selling) departments and dice) department. Its departmental income statements follow, Bana Entertainment one service (office) Problem 24-38 Departmental ince statements forect P3 Video Games T Combined $200.000 154,000 46,000 $800,000 574.000 226,000 Departmental Income Statements For Year Ended December 31, 2019 Movies Sales ... $600,000 Cost of goods sold 420.000 Gross profit 180,000 Direct expenses Sales salaries ...... 37.000 Advertising .... 12,500 Store supplies used 4,000 Depreciation-Equipment.... 4.500 Total direct expenses. 58,000 Allocated expenses Rent expense 41,000 Utilities expense............ 7,380 Share of office department expenses...... 56,250 Total allocated expenses. 104.630 Total expenses.. .. 162,630 Net Income (loss)..... $ 17,370 15,000 6,000 1,000 3.000 25,000 52,000 18,500 5,000 7.500 83,000 9.000 1,620 18.750 50,000 9.000 75,000 134.000 217,000 $ 9.000 29370 54,370 8.379 $ The company plans to open a third department in January 2020 that will sell compact discs. Management predicts that the new department will generate $300,000 in sales with a 35% gross profit margin and will require the following direct expenses: sales salaries, S18,000: advertising, S10,000; store supplies, 2.000 and equipment depreciation, $1,200. The company will fit the new department into the current rented pace by taking some square footage from the other two departments. When opened, the new Compact is department will fill one-fourth of the space presently used by the Movie department and one-third of the space used by the Video Game department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space for rent expense). The company allocates office department expenses to the perating departments in proportion to their sales. It expects the Compact Disc department to increase roce department expenses by $10,000. Since the Compact Disc department will bring new custom into the store, management expects sales in both the Movie and Video Game departments to increase No changes for those departments' gross profit percents or for their direct expenses are expected except for store supplies used, which will increase in proportion to sales. Required Movie $52.450 (564 repare departmental income statements that show the company's predicted results of operations for cal- endar-year 2020 for the three operating (selling) departments and their combined totals. (Round percents carest one-tenth and dollar amounts to the nearest whole dollar.) to the nearest one-tenth and doll Problem 24 denartments: Guitar and Piano. Information about those depart
