Do not give image format Konig Enterprises, Limited, owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrativeexpenses to the three restaurants on the basis of sales dollars. Last year the fixed administrative expenses totaled $890,000 and wereallocated as follows:Rick's Harborside$ 27,000,000Rick's Harborside$ 27,000,000RestaurantsImperial Garden$36,000,000Restaurants.Imperial Garden.$ 21,000,000$311,500Total sales-Last YearPercentage of total sales45%$ 400,500Allocation (based on the above percentages)This year the Imperial Garden restaurant increased its sales by $15 million. The sales levels in the other two restaurants remainedunchanged. The company's sales data for this year were as follows:48%Ginger Nok$ 12,000,000Total sales-This YearPercentage of total salesFixed administrative expenses for this year remained unchanged at $890,000.16%Ginger Wok$ 12,000,00035%$ 178,000Total$ 75,000,00020%100%Total$ 60,000,000100%$ 890,000Required:1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants forthis year2. 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 2Req 31. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for thisyear.2. Calculate the change in each restaurant's allocated cost from last year to this year. (Negative amounts should be indicated by a minussign.)1. Fixed administrative expense allocation current year2. Change in allocated costRick'sHarborsideReg 1 and 2ImperialGardenReq 3 >Ginger Wok$$Total00Show less A

The allocated rate depends on the allocation base selection. While selecting an allocation base its…

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 $890,000 and were allocated as follows: Total Total sales-Last Year Percentage of total sales $ 60,000,000 $ 890,000 35% $ 311,500 100% Allocation (based on the above percentages) This year the Imperial Garden restaurant increased its sales by $15 million. The sales levels in the other two restaurants remained unchanged. The company's sales data for this year were as follows: Rick's Harborside $ 27,000,000 Rick's Harborside $ 27,000,000 Restaurants Imperial Garden $ 21,000,000 45% $ 400,500 Restaurants Imperial Garden $36,000,000 Total sales-This Year Percentage of total sales 48% Fixed administrative expenses for this year remained unchanged at $890,000. Ginger Nok $ 12,000,000 16% Ginger Wok $ 12,000,000 $ 178,000 20% Total $ 75,000,000 100% 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?

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...