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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 $1,800 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $1,800 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: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
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 $
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 $
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