Homework Help is Here – Start Your Trial Now!
Business
Accounting
Fixed administrative expenses for this year remained unchanged at $970,000. Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among t restaurants for this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3 Is sales dollars a good base for allocation of fixed costs?

Fixed administrative expenses for this year remained unchanged at $970,000. Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among t restaurants for this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3 Is sales dollars a good base for allocation of fixed costs?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

R.

 

Konig Enterprises, Limited, owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrative expenses to the three restaurants on the basis of sales dollars. Last year the fixed administrative expenses totaled $970,000 and were allocated as follows: Total sales-Last Year Percentage of total sales Allocation (based on the above percentages) Rick's Harborside $ 17,630,000 Rick's Forborside $ 17,630,000 Restaurants Restaurants Imperial Garden $ 10,020,000 Imperial Garden $ 9,020,000 438 $ 417,100 228 $ 213,400 This year the Imperial Garden restaurant increased its sales by $1 million. The sales levels in the other two restaurants remained unchanged. The company's sales data for this year were as follows: Ginger Wok $ 14,350,000 Total sales-This Year Percentage of total sales 42% 24% Fixed administrative expenses for this year remained unchanged at $970,000. Ginger Wok $ 14,350,000 34% 358 $ 339,500 Total $ 42,000,000 100% Total $ 41,000,000 Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3. Is sales dollars a good base for allocation of fixed costs? 100% $ 970,000
Transcribed Image Text:Konig Enterprises, Limited, owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrative expenses to the three restaurants on the basis of sales dollars. Last year the fixed administrative expenses totaled $970,000 and were allocated as follows: Total sales-Last Year Percentage of total sales Allocation (based on the above percentages) Rick's Harborside $ 17,630,000 Rick's Forborside $ 17,630,000 Restaurants Restaurants Imperial Garden $ 10,020,000 Imperial Garden $ 9,020,000 438 $ 417,100 228 $ 213,400 This year the Imperial Garden restaurant increased its sales by $1 million. The sales levels in the other two restaurants remained unchanged. The company's sales data for this year were as follows: Ginger Wok $ 14,350,000 Total sales-This Year Percentage of total sales 42% 24% Fixed administrative expenses for this year remained unchanged at $970,000. Ginger Wok $ 14,350,000 34% 358 $ 339,500 Total $ 42,000,000 100% Total $ 41,000,000 Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3. Is sales dollars a good base for allocation of fixed costs? 100% $ 970,000
this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3. Is sales dollars a good base for allocation of fixed costs? Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for this 2. Calculate the change in each restaurant's allocated cost from last year to this year. (Negative amounts should be indicated by a minus sign.) year. Show less 1. Fixed administrative expense allocation - current year 2. Change in allocated cost Rick's Harborside Reg 1 and 2 Imperial Garden Req 3 > Ginger Wok Total
Transcribed Image Text:this year. 2. Calculate the change in each restaurant's allocated cost from last year to this year. 3. Is sales dollars a good base for allocation of fixed costs? Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for this 2. Calculate the change in each restaurant's allocated cost from last year to this year. (Negative amounts should be indicated by a minus sign.) year. Show less 1. Fixed administrative expense allocation - current year 2. Change in allocated cost Rick's Harborside Reg 1 and 2 Imperial Garden Req 3 > Ginger Wok Total
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Risk Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS