Prepare a budgeted income statement for September. **Budgeting for September: Varmit-B-Gone Analysis****Current Costs Breakdown**1. **Service Costs** - Variable Costs: $24,000 - Maintenance and Repair: $22,000 - Depreciation (Fixed): $42,000 - **Total Service Costs: $88,000**2. **Marketing and Administrative Costs** - Marketing (Variable): $14,500 - Administrative (Fixed): $55,000 - **Total Marketing and Administrative Costs: $69,500****Overall Total Costs: $157,500****Cost Adjustments for September**- Variable service and marketing costs vary with volume.- Fixed depreciation remains constant.- Fixed administrative costs will increase by 5% starting September 1.- Maintenance and repairs are contractually set to increase by 1% in September.**Requirement**Prepare a budgeted income statement for September. Ensure no rounding of intermediate calculations.**Budgeted Income Statement Template for September***Varmit-B-Gone* *Budgeted Income Statement* For the Month of September | Service Costs | ||--------------------------------------------|----------------|| | $ || Total Service Costs | $ 0 || | || Marketing and Administrative Costs | || | $ || Total Marketing and Administrative Costs | $ 0 || | || **Total Costs** | $ 0 || | $ |Note: Specific amounts in each category are to be filled in after applying the percentage increases to the applicable costs. **Overview of Varmit-B-Gone Pest Control Service Operations**Varmit-B-Gone is a pest control service operating in a suburban neighborhood. The company aims to conduct at least one service call per month to homes subscribing to its service. The service frequency increases during the summer, and the number of subscribers varies seasonally. Below is a summary of subscribers and average service calls per subscriber from March to August:| **Month** | **Subscribers** | **Service Calls (per subscriber)** ||-----------|-----------------|------------------------------------|| March | 600 | 0.6 || April | 700 | 0.9 || May | 1,400 | 1.5 || June | 1,600 | 1.9 || July | 1,600 | 3.0 || August | 1,500 | 2.4 |- **Service Fee**: The average price per service call is $80.- **Collections**: Payments are distributed as follows: - 30% in the month of service - 60% in the month following the service - 8% in the second month after service - 2% uncollectible**Projected Changes for September**- **Subscribers**: Expected to decline by 10% from August.- **Service Calls/Subscriber**: Estimated to decrease by 20%.**Cost Breakdown for August**1. **Service Costs:** - Variable Costs: $24,000 - Maintenance and Repair: $2,800 - Depreciation (Fixed): $6,000 - **Total Service Costs**: $32,8002. **Marketing and Administrative Costs:** - Marketing (Variable): $15,000 - Administrative (Fixed): $6,500 - **Total Marketing/Admin Costs**: $21,500- **Total Costs**: $54,300**Cost Adjustments and Assumptions for September**- Variable service and marketing costs will adjust with volume.- Fixed depreciation costs remain unchanged.- Fixed administrative costs will increase by 5%.- Maintenance and repair increase by 1% per a contractual agreement.**Task Requirement**Prepare a budgeted income statement for September, ensuring precise calculations without rounding intermediate values.

Working Notes: 1. Revenue of September: = Subscribers for the month of august * (100% - % of fall) *…

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 varles with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow: Subecribers 600 700 1,400 1,600 1,600 1,500 Service calla (per wubacriber) 0.6 0.9 1.5 2.5 3.0 2.4 March April May June July Auguat 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 aintenance and repair Depreciation (fixed) Total $24,000 22,000 42,000 S8,000 Marketing and administrative costa Marketing (variable) Administrative (fixed) $ 14,500 55,000 S 69,500 Total 7otal coats $157,500 Variable service and marketing costs change with volume. Fixed depreciation wil 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 increese in September

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q