Williams Company began operations in January 2017 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. See WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2017 Clock Mirror Combined Sales $ 210.000 $115,000 $325,000 Cost of goods sold 102.909 71,300 174, 260 Gross profit 107,100 43,700 158,888 Direct expenses Sales salaries 19.5ee 6.900 26,4ee Advertising 2.eee 2,9ee Store supplies used sse zee 1,25e Depreciation-Equipment 2.ee 2.ee Total direct expenses 23,750 8.800 32,55e Allocated expenses Rent expense 7.040 4,020 11.06e Utilities expense 2.700 2.ee 4,789 Share of office department expenses 11.000 5,600 16,000 Total allocated expenses 20,740 11,02e 31,76 Total expenses 44,490 19,820 64,310 Net income $ 62,610 $ 23,880 $ 86,490 300 Williams plans to open a third department in January 2018 that will sell paintings. Management predicts that the new department will generate $54,000 in sales with a 75% gross profit margin and will require the following direct expenses: sales salaries, $8,000: advertising, $800; store supplies, $700, and equipment depreciation, $1,000. 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 does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space for 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 $8,400. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 14%. 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. Required: Prepare departmental income statements that show the company's predicted results of operations for calendar-year 2018 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) nearest whole dollar amount.) WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2018 Clock Mirror Paintings Combined 0 0 Direct expenses Total direct expenses Allocated expenses ol 0 Total allocated expenses Total expenses 0 01 S ol $ 0 $ 0
