Williams plans to open a third department in January 2018 that will sell paintings. Management predicts that the new department will generate $51,000 in sales with a 75% gross profit margin and will require the following direct expenses: sales salaries, $7,000; advertising, $1,100; 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 (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 $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 9%. 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.) Williams Company began operations in January 2017 with two operating (selling) departments and one service (office) department. Its departmental income statements follow. WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2017 Clock Mirror Combined Sales $ 240,000 $ 85,000 $325,000 Cost of goods sold 117,600 52,700 170,300 Gross profit 122,400 32,300 154,700 Direct expenses Sales salaries 21,000 7,600 28,600 Advertising 1,300 400 1,700 Store supplies used 600 750 1,350 Depreciation-Equipment 1,500 300 1,800 Total direct expenses 24,400 9,050 33,450 Allocated expenses Rent expense 7,090 3,840 10,930 Utilities expense 2,900 2,000 4,900 Share of office department expenses 10,500 5,500 16,000 Total allocated expenses 20,490 11,340 31,830 Total expenses 44,890 20,390 65,280 Net income $ 77,510 $ 11,910 $ 89,420 Williams plans to open a third department in January 2018 that will sell paintings. Management predicts that the new department will generate $51,000 in sales with a 75% gross profit margin and will require the following direct expenses: sales salaries, $7,000; advertising, $1,100; 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 (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 $8,400. Since the painting department will bring new customers into the store, mananament avnarte calec in both the clock and mirror donartmante to increace hva No change for thaca danartmante' arnce 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.) WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2018 Clock Mirror Paintings Combined Direct expenses Total direct expenses Allocated expenses Total allocated expenses Total expenses
