You have the following monthly information about a large restaurant complex comprising three departments:
The owner wants to allocate indirect costs to each department based on
square footage to get a better picture of how each department is doing.
1,200 sq. ft.
840 sq. ft.
960 sq. ft.
a. Allocate the indirect costs as indicated.
b. The owner has an offer from the souvenir store operator who is willing to rent the coffee shop space for $8,000 a year. Advise the owner whether to accept the offer.
c. Before making a final decision, the owner of the restaurant decides to evaluate the changes to indirect costs if the coffee shop space is rented.
Costs if Coffee
Administrative and general
Advertising and promotion
Repairs and maintenance
If the coffee shop is not operated, it is estimated that lounge revenue will decline by $13,600 a year and lounge direct costs will go down by $10,200. Dining room revenue and direct costs will not be affected. Should the owner accept the offer to rent out the coffee shop?
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You have the following monthly information about a large restaurant complex comprising three departm was first posted on July 6, 2020 at 2:24 am.
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