Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to

image text in transcribed
image text in transcribed
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: March April May June July August Subscribers 1,200 1,300 2,000 2,200 2,200 2,000 Service calls (per subscriber) 0.6 0.9 1.5 2.5 3. 2.4 The average price charged for a service call is $80. Of the service calls, 30 percent are paid in the month the service is rendered, 60 percent in the month after the service is rendered, and 8 percent in the second month after. The remaining 2 percent is uncollectible. Varmit-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber should decrease by an estimated 20 percent. The following Information is available for costs incurred in August. All costs except depreciation are paid in cash. Service costs Variable costs Maintenance and repair Depreciation (fixed) Total Marketing and administrative costs Marketing (variable) Administrative (fixed) Total Total costo $ 30,000 28.000 48.000 $100,000 $ 20,500 61,000 5 31,500 $167,500 Variable service and marketing costs change with volume. Fixed depreciation will remain the same, but fixed administrative costs will Increase by 5 percent beginning September 1. Maintenance and repair are provided by contract, which calls for a 1 percent increase in September Required: Prepare a budgeted income statement for September (Round intermediate calculations to 2 decimals places.) VARMIT-B-GONE Budgeted Income Statement For the Month of September Service costs Total service costs Marketing and administrative S 0 Total marketing and administrative costs Total costs $ 0 0 $ 5 0

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

Introduction To Data Analytics For Accounting

Authors: Vernon Richardson, Katie Terrell, Ryan Teeter

1st Edition

126406828X, 978-1264068289

More Books

Students also viewed these Accounting questions