Prepare a consolidated departmental income statement

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Reference no: EM131776026

Question - Cindy's Restaurant has three sales revenue departments with direct costs and average monthly figures given in the following information:

Departments

Dining

Banquets

Beverages

Sales revenue

$204,000

S I 10,000

592,000

Cost of sales

81,600

41,800

29.440

Wages and salaries cost

65.280

35.200

12.880

Other direct costs

18,360

8.800

1.840

The restaurant also has the following indirect, undistributed costs:

Administrative and general expenses

512.000

Marketing expenses

10.000

Utilities expense

5.000

Property operation and maintenance

12.120

Depreciation expense

14.000

Insurance expense

4,000

a. Prepare a consolidated departmental contributory income statement showing each of the three divisions side by side for comparison. Do not allocate indirect costs.

b. Allocate the indirect costs to the divisions and prepare a departmental income statement showing each of the three divisions side by side for comparison. Administrative, general, and marketing costs are allocated based on sales revenue. The remaining indirect costs are allocated based on square footage used by each division: Round all percentage calculations to a whole percentage.

Dining 2.400 sq. ft.           Banquet 3.000. sq. ft.     Beverage 600 sq. ft.

c. Alter allocating the indirect costs. would you consider closing any of the divisions? Why or why not?

Reference no: EM131776026

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