MyCarShop is a chain of used car-dealers with showrooms in Leicester, Derby and Chesterfield and a separate Head Office. The management accountant is reviewing the profitability of each showroom. The rent and staff costs incurred by each showroom can be saved in the event of closure. Marketing costs are allocated to each showroom, but would not be saved, if any shop were to close. Head office cost is charged at a rate of 7% of sales. The data regarding costs and sales revenues for each showroom are presented below. £000 Leicester Derby Chesterfield Sales 1,500 1,375 1,230 Cost of sales 1,250 1,240 1,184 Rent of showroom 50 67 78 Showroom staff salaries 21 28 12 Marketing costs 45 22 18   What type of costs is the rent of showroom?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  1. MyCarShop is a chain of used car-dealers with showrooms in Leicester, Derby and Chesterfield and a separate Head Office. The management accountant is reviewing the profitability of each showroom. The rent and staff costs incurred by each showroom can be saved in the event of closure. Marketing costs are allocated to each showroom, but would not be saved, if any shop were to close. Head office cost is charged at a rate of 7% of sales.

    The data regarding costs and sales revenues for each showroom are presented below.

    £000

    Leicester

    Derby

    Chesterfield

    Sales

    1,500

    1,375

    1,230

    Cost of sales

    1,250

    1,240

    1,184

    Rent of showroom

    50

    67

    78

    Showroom staff salaries

    21

    28

    12

    Marketing costs

    45

    22

    18

     

    What type of costs is the rent of showroom?

     

     

      a.

    Sunk

      b.

    Non relevant

      c.

    Relevant

      d.

    Committed

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