Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Time-To-See Company began operations in January 2011 with two operating (selling) departments and one service (office) department. Its departmental income statements follow TIME-TO-SEE COMPANY Departmental

image text in transcribed
Time-To-See Company began operations in January 2011 with two operating (selling) departments and one service (office) department. Its departmental income statements follow TIME-TO-SEE COMPANY Departmental Income Statements For Year Ended December 31, 2011 s 122 500 s75000 Co ot goods sold 60,000 32.000 -20500 83,000 Gross prof Direct expense 20,000 7 27000 Store supplies Rent experse Shae of ofice depariment expenses0,50040 5,000 17061800 otal expenses 3,720 het proft Time-To-See plans to open a third department in January 2012 that will sell paintings. Management predicts that the new department will generate $35,000 in sales with a 55% gross profit margin salaries, S8,000; 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-sixth 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 (or 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 7%. 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. and will require the following direct expenses: s ales Required Prepare departmental income statements that show the company's predicted results of operations for calendar year 2012 for the three operating (selling) departments and their combined totals. (Input all amounts as positive values. Do not round your percentage value, round intermediate and final answers to the nearest whole dollar amount. Omit the "" sign in your response.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Costing

Authors: Terry Lucey

5th Edition

1858051657, 9781858051659

More Books

Students also viewed these Accounting questions

Question

Define and explain the goals of employee orientation/onboarding

Answered: 1 week ago