# 6-3 Konig Enterprises, Ltd., 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. During 2008, the fixed administrative expenses totaled $2.000,000. These expenses were allocated as follows: Restaurants Harborsidemperial $16,000,000 $15,000,000 $9,000,000 $40,000,000 Rick's Ginger Wok Garden Total Total cales-2008 Percentage of total sales... Allocation (baced on the 40% 37.5% 22.5% 100% above percentagec) S800,000 750,000 $450,000 $2,000,000 During 2009, the following year, the Imperial Garden restaurant increased its sales by $10 million. The sales levels in the other two restaurants remained unchanged. The company's 2009 sales data were as follows: Restaurants Rick's Harborside 16,000,000 $25,000,000 $9,000,000 $50,000,000 Imperial Garden Ginger Wok Total Total cales-2009 Percentage of total sales 32% 50% 18% 100% Fixed administrative expenses remained unchanged at $2,000,000 during 2009 Required: I. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for 2009 Compare your allocation from (1) above to the allocation for 2008. As the manager of the Imperial Garden, how would you feel about the amount that has been charged to you for 2009? Comment on the usefulness of sales dollars as an allocation base 2. 3