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The Windshield People repair chips in car

Price: $3.99


P16-22A Calculating income and unit cost for a service company [15–20 min]
The Windshield People repair chips in car windshields in the company’s home
county. Rocky Chip, the owner, incurred the following operating costs for the
month of February 2012:

Salaries and wages . . . . . . . . . . . . . . . . . . . . .9000
Windshield repair materials . . . . . . . . . . . . . .4900
Depreciation on truck . . . . . . . . . . . . . . . . . .250
Depreciation on building and equipment . . . .800
Supplies expense . . . . . . . . . . . . . . . . . . . . . . .600
Gasoline and utilities . . . . . . . . . . . . . . . . . . .2130

The Windshield People earned $26,000 in revenues for the month of February by
repairing 500 windshields. All costs shown are considered to be directly related to
the repair service.

Requirements

1. Prepare an income statement for the month of February. Compute the ratio of
total operating expense to total revenue and operating income to total revenue.
2. Compute the per unit cost of repairing one windshield.
3. The manager of The Windshield People must keep unit operating cost below
$50 per windshield in order to get his bonus. Did he meet the goal?
4. What kind of system could The Windshield People use to integrate all its data?

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