(answered) Industrial Maids Service Ltd IMS is a

corporation based in
Industrial Maids Service Ltd. (IMS) is a corporation based in Sarnia, Ontario that focuses on
cleaning commercial properties, which is a very competitive business. Although IMS tries to
recruit highly trained employees, it is not able to pay a very high hourly salary. Cleaning
services are charged t
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Industrial Maids Service Ltd. (IMS) is a corporation based in Sarnia, Ontario that focuses on
cleaning commercial properties, which is a very competitive business. Although IMS tries to
recruit highly trained employees, it is not able to pay a very high hourly salary. Cleaning
services are charged to clients by the hour and the average rate is $17 per hour. Some of the
cleaning done by this company is performed with larger equipment that is repaired by the
company. The average employee will work an entire shift at one client's premises.Prestige
Cleaning Services Inc. (PCS) also operates a cleaning service in Sarnia but this company
focuses on residential cleaning and targets large homes in high-income areas. The company is
owned by a former NHL star who is very effective at securing cleaning contracts. Most of the
cleaning work done by this company occurs during the day and the company is able to attract
experienced cleaning staff and pay them a higher salary. Cleaning services are charged to
clients by the hour and the average rate is $30 per hour. The equipment used by this company
is inexpensive. Most employees will clean two or three houses during a single shift so the
company owns several vehicles. Listed below are condensed income statements of the two cor
porations:_____________________________________IMS.....................................PCSService
revenue.............................$1,020,000................................$900,000Salaries
expense................................600,000.................................450,000Rent
expense.....................................42,000...................................23,000Other operating
expenses........................4,000...................................14,000Interest
expense.................................25,000...................................13,000Profit before income
tax.....................349,000..................................400,000Income tax
expense.............................87,250.................................100,000Profit..........................................$
261,750.................................$300,000Instructions(a) How many hours of cleaning service did
each company provide to its clients?(b) What is the average rate of pay per hour that each
company pays its employees?(c) Which company do you think uses larger facilities? Why do
you think this is?(d) Why does PCS likely have higher other operating expenses than IMS?(e)
One of the companies financed its start up by taking out a higher amount of bank loan than the
other company. Which company do you think this was? Both companies are charged the same
rate of interest by their banks.(f) What is the most significant factor that makes PCS more
profitable than IMS?View Solution:
Industrial Maids Service Ltd IMS is a corporation based in
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