Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.

Pretax income	?
Gross profit	?
Allocated costs (uncontrollable)	$2,030
Labor expense	41,590
Sales	189,000
Research and development (uncontrollable)	315
Depreciation expense	18,000
Net income/(loss)	?
Cost of goods sold	119,070
Selling expense	1,240
Total expenses	?
Marketing costs (uncontrollable)	800
Administrative expense	680
Income tax expense (21% of pretax income)	?
Other expenses	320

Question Content Area

A. Prepare the income statement to include all costs, but separate out uncontrollable costs using the above information. Round your answers to the nearest dollar.

BDS Enterprises Income Statement For the Year Ended December 31, 20xx

Allocated Costs (Uncontrollable)Direct MaterialLabor ExpenseSalesService Revenue	$- Select -
Allocated Costs (Uncontrollable)Cost of Goods SoldDirect MaterialLabor ExpenseService Revenue	- Select -
Gross ProfitGross LossNet IncomeNet LossSales	$- Select -
Controllable Expenses:
Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Labor ExpensePretax IncomeSales	$- Select -
Cost of Goods SoldDepreciation ExpenseIncome Tax Expense (21% of Pretax Income)Pretax IncomeSales	- Select -
Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Pretax IncomeSelling ExpenseSales	- Select -
Administrative ExpenseCost of Goods SoldIncome Tax Expense (21% of Pretax Income)Pretax IncomeSales	- Select -
Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Other ExpensesPretax IncomeSales	- Select -
Total Controllable Expenses	$fill in the blank ef48dd003035006_17
Uncontrollable Expenses:
Allocated Costs (Uncontrollable)Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Pretax IncomeSales	$- Select -
Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Pretax IncomeResearch and Development (Uncontrollable)Sales	- Select -
Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Marketing Costs (Uncontrollable)Pretax IncomeSales	- Select -
Total Uncontrollable Expenses	$fill in the blank ef48dd003035006_24
Total Expenses	$fill in the blank ef48dd003035006_25
Gross ProfitGross LossNet LossPretax IncomePretax Loss	$- Select -
Allocated Costs (Uncontrollable)Cost of Goods SoldIncome Tax Expense (21% of Pretax Income)Marketing Costs (Uncontrollable)Pretax Income	- Select -
Gross ProfitGross LossNet IncomeNet LossPretax Income	$- Select -

Question Content Area

B. Calculate the profit margin, return on investment, and residual income, excluding uncontrollable expenses. Assume an investment base of $100,000 and 4% cost of capital. Round your percentage answers to one decimal place and residual income to the nearest dollar.

Profit margin	fill in the blank 80cccf00b04004d_1	%
Return on investment	fill in the blank 80cccf00b04004d_2	%
Residual income	$fill in the blank 80cccf00b04004d_3

C. Which of the following statements is correct? Uncontrollable costs are included in the income statement because

a. these costs ultimately affect each division.

b. these costs are the responsibility of each division manager.

c. these costs are non-recurring.

d. these costs are head office's responsibility