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1 From the preceding information, prepare contributory income statements for the first year of operations for each of the three departments. Then combine departmental contributory
1 | |||||||||
From the preceding information, prepare contributory income statements for the first | |||||||||
year of operations for each of the three departments. | |||||||||
Then combine departmental contributory incomes in a combined departmental | |||||||||
operating budget format showing a combined total contributory figure, | |||||||||
and deduct the undistributed, indirect costs to arrive at a budgeted | |||||||||
income before depreciation, interest, and income tax. | |||||||||
(In this problem, round all final numbers to the nearest dollar.) | |||||||||
2 | |||||||||
Management is considering running an opening year special. By spending | |||||||||
$10,000 in advertising and offering rooms at an average rate of $65 | |||||||||
it is expected occupancy rate will increase to 71%. | |||||||||
The increase in occupancy rate is expected to add 0.01 | |||||||||
to the seat turnover rate for the dining room and coffee shop. | |||||||||
The fixed wages expense and the other undistributed indirect expenses | |||||||||
are not expected to change. | |||||||||
Prepare a revised contributory income statement and | |||||||||
recommend to management whether this would be a good idea | |||||||||
or not. |
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