Check my work Williams Company began operations in January 2017 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2017 clock Sales Mirror Combined $ 130,000 $ 55,000 $185,000 Cost of goods sold 63,700 34,100 Gross profit 92.300 66,300 Direct expenses 20,900 87,200 Sales salaries 20,000 7.000 Advertising 27,000 1,200 500 1,700 Store supplies used 900 400 Depreciation--Equipment 1,300 1,500 300 Total direct expenses 1.800 23,600 8,200 31,800 Allocated expenses Rent expense 7,020 3.780 10,000 Utilities expense 2.600 1.400 4,000 Share of ottice department expenses 10.500 4,500 15,000 Total allocated expenses 20.120 9,600 29,600 Total expenses 43,220 17,880 Net income $ 22,580 $3,020 $ 25,600 Williams plans to open a third department in January 2018 that will sell paintings. Management predicts that the new department will generate $50,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,000; advertising, $800; store supplies, $500; and equipment depreciation, $200. 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 Check my work Williams plans to open a third department in January 2018 that will sell paintings, Management predicts that the new department will generate $50,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,000. advertising, $800; store supplies, $500, and equipment depreciation, $200. 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 expense). 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 $7.000. 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 2018 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2018 Clock Mirror Paintings Combined Direct expenses Total direct expenses Allocated expenses Total allocated expenses Total expenses
