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 1,100 1,200 1,900 2,100 2,100 2,000 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. Service calls (per subscriber) 0.6 0.9 1.5 2.5 3.0 2.4 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 costs estion 6-Home... $ 29,000 27,000 47,000 $103,000 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. $ 25,000 70,000 $ 95,000 $198,000 Required: Prepare a budgeted income statement for September. (Round intermediate calculations to 2 decimals places.) VARMIT-B-GONE Budgeted Income Statement < Prev 6 of 17 acer Next >
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 1,100 1,200 1,900 2,100 2,100 2,000 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. Service calls (per subscriber) 0.6 0.9 1.5 2.5 3.0 2.4 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 costs estion 6-Home... $ 29,000 27,000 47,000 $103,000 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. $ 25,000 70,000 $ 95,000 $198,000 Required: Prepare a budgeted income statement for September. (Round intermediate calculations to 2 decimals places.) VARMIT-B-GONE Budgeted Income Statement < Prev 6 of 17 acer Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text: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
1,100
1,200
1,900
2,100
2,100
2,000
Service calls (per
subscriber)
0.6
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.
Service costs
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.
0.9
1.5
2.5
3.0
2.4
Variable costs
Maintenance and repair.
Depreciation (fixed)
Total
Marketing and administrative costs
Marketing (variable)
Administrative (fixed)
Total
Total costs
Question 6-Home...
$ 29,000
27,000
47,000
$103,000
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.
$ 25,000
70,000
$ 95,000
$198,000
Required:
Prepare a budgeted income statement for September. (Round intermediate calculations to 2 decimals places.)
VARMIT-B-GONE
Budgeted Income Statement
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Transcribed Image Text:Maintenance and repair
Depreciation (fixed)
Total
Marketing and administrative costs
Marketing (variable)
Administrative (fixed)
Total
Total costs
Sales revenue
Service costs:
Variable service and marketing costs change with volume. Fixed depreciation will remain the same, but fixed administrative
increase by 5 percent beginning September 1. Maintenance and repair are provided by contract, which calls for a 1 percent
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
Variable costs
Maintenance and repair
Total service costs
Marketing and administrative:
Marketing (variable)
Administrative (fixed)
Total marketing and administrative costs
Total costs
estion 6 - Home...
27,000
47,000
$103,000
$
$ 25,000
70,000
$ 95,000
$198,000
$
$
$
0
0
Saved
0
0
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