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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 $1,300 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 $130. 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 470 530 Service costs 1,090 1,230 1,260 1,410 Additional Washes (Average per Member) 1.9 2.2 1.8 1.7 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. Variable costs Equipment maintenance Depreciation (fixed) 2.0 2.5 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. $49,500 45,500 86,000

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 $1,300 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 $130. 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 470 530 Service costs 1,090 1,230 1,260 1,410 Additional Washes (Average per Member) 1.9 2.2 1.8 1.7 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. Variable costs Equipment maintenance Depreciation (fixed) 2.0 2.5 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. $49,500 45,500 86,000

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 18E: On December 1, 2019, AwakcAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers....
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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 $1,300 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 $130. 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 470 530 Service costs 1,090 1,230 1,260 1,410 Additional Washes (Average per Member) 1.9 2.2 1.8 1.7 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. Variable costs Equipment maintenance. Depreciation (fixed) Total 2.0 2.5 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. $ 49,500 45,500 86,000 $ 181.000
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 $1,300 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 $130. 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 470 530 Service costs 1,090 1,230 1,260 1,410 Additional Washes (Average per Member) 1.9 2.2 1.8 1.7 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. Variable costs Equipment maintenance. Depreciation (fixed) Total 2.0 2.5 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. $ 49,500 45,500 86,000 $ 181.000
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. Service costs: Required: Prepare a budgeted income statement for July. Note: Do not round intermediate calculations. Enter your answers rounded to the nearest whole dollars. Total service costs Cornwall Mobile Detailing Budgeted Income Statement For the Month of July Show Transcribed Text Total service costs Marketing and administrative: Total marketing and administrative costs Total costs < Prev $ 181,000 10 of 10 $ 37,500 110,500 $ 148,000 $ 329,000 g ▬▬▬ Next > ‒‒‒
Transcribed Image Text: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. Service costs: Required: Prepare a budgeted income statement for July. Note: Do not round intermediate calculations. Enter your answers rounded to the nearest whole dollars. Total service costs Cornwall Mobile Detailing Budgeted Income Statement For the Month of July Show Transcribed Text Total service costs Marketing and administrative: Total marketing and administrative costs Total costs < Prev $ 181,000 10 of 10 $ 37,500 110,500 $ 148,000 $ 329,000 g ▬▬▬ Next > ‒‒‒
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