Solution-Prepare a consolidated departmental income

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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Prepare a consolidated departmental income statement

Reference no: EM131776026

Reference no: EM131776026

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