Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a membership basis. Members pay $1,800 dues per month, which entitle them to a complete wash and detail service monthly. Members may also order additional car washes during the month at a fee of $155. Additional washes are common in both summer and winter months. The number of members also varies with the season. The number of members and the average number of additional washes by members for the months of interest follow: January February March April May June Members 520 580 1,140 1,200 1,310 1,460 Additional Mashes (Average per Member) 2.4 2.7 2.3 2.2 2.5 3.0 Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues, 5 percent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is
Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a membership basis. Members pay $1,800 dues per month, which entitle them to a complete wash and detail service monthly. Members may also order additional car washes during the month at a fee of $155. Additional washes are common in both summer and winter months. The number of members also varies with the season. The number of members and the average number of additional washes by members for the months of interest follow: January February March April May June Members 520 580 1,140 1,200 1,310 1,460 Additional Mashes (Average per Member) 2.4 2.7 2.3 2.2 2.5 3.0 Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues, 5 percent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
help me
Transcribed Image Text:Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a
membership basis. Members pay $1,800 dues per month, which entitle them to a complete wash and detail service monthly. Members
may also order additional car washes during the month at a fee of $155. Additional washes are common in both summer and winter
months. The number of members also varies with the season. The number of members and the average number of additional washes
by members for the months of interest follow:
January
February
March
April
May
June
Members
520
580
1,140
1,200
Service costs
1,310
1,460
Additional
Washes (Average
per Member)
Variable costs
Equipment maintenance
Depreciation (fixed)
Total
2.4
2.7
2.3
Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues, 50
percent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is
uncollectible. Additional washes are payable in cash.
2.2
2.5
3.0
Cornwall estimates that the number of members in July should increase 20 percent above June levels, and the number of additional
washes per member should increase by an estimated 12.5 percent. The following information is available for costs incurred in June. All
costs except depreciation are paid in cash.
$ 52,000
48,000
91,000
$191,000
Transcribed Image Text:Depreciation (tixed)
Total
Marketing and administrative costs
Marketing (variable)
Administrative (fixed).
Total
Total costs
Variable service and marketing costs change with volume, measured by number of members. Fixed depreciation will remain the same.
but fixed administrative costs will increase by 10 percent beginning July 1. Equipment maintenance is outsourced and the contract calls
for a 5 percent increase beginning July 1.
Required:
Prepare a budgeted income statement for July.
Note: Do not round Intermediate calculations. Enter your answers rounded to the nearest whole dollars.
Cornwall Mobile Detailing
Budgeted Income Statement
For the Month of July
Equipment maintenance
Service costs:
Total service costs
91,000
$191,000
$ 40,000
113,000
$153,000
$ 344,000
$
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education