The North Central Water Company has finalized its financial statements for the 2017 financial year. The Companys board of directors has asked you, their cost accountant, to look at the financial results and to compare the financial performance for the 2017 fiscal year to the results of the 2016 financial year. The board would also like you to project the revenues and expenses for the 2018 financial year based on several key assumptions. They have asked you to prepare your findings in a one page memorandum.

Based on the financial results provided above, calculate the following items:

1. Calculate each revenue and expense item as a percentage of total revenue in 2017 and 2016 (round to the nearest percentage)

2. Calculate the water sales per customer for each year (round to two decimal places)

3. Calculate the differences between the 2017 and 2016 financial results for each revenue and expense item, as well as water sales per customer.

4. Calculate the companys financial performance for 2018 based on the following assumptions. Assume that the water company expects that in 2018 the number of customers will increase by 2%, water sales will increase by 5% due to increased customer demand, cost of water sales will increase by 3% because of higher chemical costs, payroll expenses will increase by 10% due to wage increases and higher medical insurance expenses, and all other revenues and expenses will remain unchanged.

I. Financial Results: Total Number of Customers 25,000 20,000 % of Total Revenues % of Total 2017 2016 Re venues Revenues: Water Sales Late Fees Fire Hydrant Fees Total Revenues $1,400,000 100% $1,110,000 100% xpenses Cost of Water Sold Payroll Expense Overhead Expense Miscellaneous Expenses Total Expenses Net Income (Loss)