Refer to the data in Exercise 13-28. 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 . . . . . . . . . . . . . . . . . . . . . . . . $ 24,000
Maintenance and repair. . . . . . . . . . . . . . . . . . 22,000
Depreciation (fixed) . . . . . . . . . . . . . . . . . . . . 42,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,000
Marketing and administrative costs
Marketing (variable) . . . . . . . . . . . . . . . . . . . $ 14,500
Administrative (fixed) . . . . . . . . . . . . . . . . . . 55,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 69,500
Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . .$157,500
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.
Required
Prepare a budgeted income statement for September.