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Chapter 24 End-of-Chapter (EOC) Quix Complete this project as a separate word or pdf file Submit as a Canvas Assignment at the course website Clearly Print Your Name and Assignment Name at the top of each page King Galleries of Scottsdale began operations in January of this year with two operating (selling) departments and one service (offico) department. Its departmental income statements follow King Galleries Departmental Income Statements For the Year Ended December 31, 20xx Sales Cost of Goods Sold Gross Profit Paintings $130,000 63,700 66,300 Prints $ 55,000 34,100 20,900 Combined $185,000 97,800 87,200 Direct Expenses Sales Salaries Advertising Store Supplies Used Depreciation, Equipment Total Direct Expenses 20,000 1,200 900 1,500 23,600 7,000 500 400 300 8,200 27,000 1,700 1,300 1,800 31,800 Allocated Expenses Rent Expense Utilities Expense Share of Office Dept Exp Total Allocated Expenses 7,020 2,600 10,500 20,120 3,780 1,400 4.500 9,680 10,800 4,000 15,000 29,800 Total Expenses 43,720 17,880 61, 600 Net Income $ 22,580 $ 3,020 $ 25,600 The company plans to open a third department in January of next year that will sell Fine Art Photography (FAP). Management predicts the new department will generate $50,000 in Sales with a 559 Gross Profit Margin and will require the following Direct Expenses: Sales Salaries, $8.000: Advertising S80 Stor Surros $500d Emin Repression $200 Direct Expenses Sales Salaries 20,000 7,000 Advertising 27,000 1,200 500 Store Supplies Used 1,700 900 400 1,300 Depreciation, Equipment 1,500 300 1,800 Total Direct Expenses 23,600 8,200 31,800 Allocated Expenses Rent Expense 7,020 3.780 10,800 Utilities Expense 2,600 1,400 4,000 Share of Office Dept Exp 10,500 4,500 15,000 Total Allocated Expenses 20,120 9,680 29,800 Total Expenses 43, 720 17,880 61,600 Net Income $ 22,580 $ 3,020 $ 25,600 The company plans to open a third department in January of next year that will sell Fine Art Photography (FAP). Management predicts 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 Equip Depreciation, $200. The company will fit the new department into the current rented space by taking some square footage from the other two departments. When opened the new Custom Orders Department will fill one-fifth of the space presently used by the Paintings Department and one-fourth of the space used by the Prints Department Management does not predict any increase in Utilities costs, which are allocated to the Departments in proportion to the occupied space (or rent expense). The company allocated office department expenses to operating departments in proportion to their Sales. It expects the FAP Department to increase total office department expenses by $7,000. Since the FAP Department will bring new customers into the store, management expects sales in the Residential and Commercial Departments to increase by 88. 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: Prepare departmental income statements that show the company's predicted results of operations for the next calendar year for the three operating departments and their combined totals. (NOTE: Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.)
