P $1-8($Algo$)$ Cost Data for Managerial Purposes $($LO $1-3$

Ayodele Appliance Shop is a small business located on the coast. It specializes in appliance repair and is known in the area for fast, reliable, and friendly service. Abeni Ayodele, the owner and primary repair specialist, has been working with appliances since she learned about them helping her father in his shop. After teaching a class on appliance repair at the local technical college, Abeni thinks she might be able to develop a training business to complement the shop's repair work. Abeni has put together some estimates on the impact of a training program on revenues and costs. She estimates that revenues would grow by about $30$ percent. Parts costs $($mostly for demonstration machines$)$ would increase by about $10$ percent and labor costs by about $50$ percent. The rent, which is based on revenue, would also increase by about $30$ percent. Utilities would increase by about $30$ percent and insurance costs by $18$ percent. Other costs would increase by $20$ percent. Using her spreadsheet skills, Abeni puts together the following estimated annual income statement assuming she offers both repair and training services.

Required:

a$-1.$ Prepare an income statement for repair service only.

a$-2.$ Based on the financial impact, should Abeni add training to her current repair business?

Required:

a$-1.$ Prepare an income statement for repair service only.

a$-2.$ Based on the financial impact, should Abeni add training to her current repair business?

Complete this question by entering your answers in the tabs below.

Prepare an income statement for repair service only.

Note: Round your intermediate calculations and final answers to nearest whole dollar.

Ayodele Appliance Shop Annual Income Statement Repair and Training Service Repair Service Only Sales revenue $ $532,500$ Costs Parts $104,280$ Labor $174,000$ Rent $108,000$ Utilities $42,640$ Insurance $7,350$ Other costs $23,340$ Total costs $ $459,610$ Operating profit $($loss$)$ $ $72,890$

b$.$ Are there other factors she should consider?

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answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark

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Whether training business will lead to loss of popularity in repair business.

What Abeni could make by teaching at the local technical college.

Whether training will lead to customers using Abeni's repair services.

Whether the difference in the estimates is really significant enough to make the decision based on financial estimates.

$?$ Whether training business requires senior level management for successful implementation.

Based on the financial impact, should Abeni add training to her current repair business?

Should Abeni add training to her current repair business?

b$.$ Are there other factors she should consider?

Note: You may select more than one answer. Single click the box with the q