Problem 9-3A Departmental income statements; forecasts LO P3 Wilams Company began operations in January 2015 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. ILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2015 Sales Cost of goods sold $130,000 $55,000$185,000 63,700 34,100 97800 Gross proft Direct expenses Sales salaries Advertising Store supplies used Depreciation-Equipment 66,300 20900 87200 20,0007,000 27 000 1,700 1,300 1,800 1,200 900 1,500 500 400 300 Total direct expenses 23,600 8200 31.800 Allocated expenses Rent expense Utilities expense Share of office department expenses 7,020 3,780 10 800 2,600 1400 4,000 10,500 4,500 15,000 Total allocated expenses 20,120 9680 29 800 43,720 17880 61600 s 22,580 3,020 25,600 Total expenses Net income Williams plans to open a third department in January 2016 that will sell paintings. Management predicts that the new department will generate $50 On sales th 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