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
Chapter1: Financial Statements And Business Decisions
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