FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
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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
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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
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