Consider the following monthly income statement for the Double K Hotel: Income Taxes Net Income Assume the square footage of the rooms department totals 50,000 while the square footage of the food department totals 10,000 1. Using square footage and the SABA, prepare a fully allocated income statement. 2. What do the results from part 1 suggest? Problem 18 Required: Gift Shop Revenue Cost of Sales 45,000 $ 500 Labor Costs & Related Expenses Other Direct Expenses Departmental Income Double K Hotel Income Statement Rooms Food Total $500,000 $500,000 $ 2,000 $1,002,000 180,000 1,000 181,000 120,000 130,000 400 250,400 40,000 100 85,100 $340,000 $145,000 $ 485,500 Payroll non molta & Related Other 150 Total Dis ons $60,000 $30,000 $ 90,000 45,000 bluorleen 25,000 00northqb 70,000 30,000 40,000 inim70,000 10,000 10,000 Mbre 80,0000 4199 80,000 gnitM bris 2320,000 Undistributed Expenses: Administrative and General Sales and Marketing Property Operation & Maintenance and Utility Costs Insurance Depreciation ol 336 Chapter 6 Income Before Income Taxes Income Taxes Net Income $165,000 50,000 $115,500 Indirect expenses will be allocated based on the number of employees, who are distributed as follows: Department Number of Employees Rooms 55 Food 70 Gift Shop 12 Administrative and General 20 Marketing 15 Property Operation & Maintenance and Utility Costs 10 Required: Prepare a fully allocated income statement using the single allocation basis approach to cost allocation. Problem 19 The owner of the Double K Hotel in Problem 15 would like to develop a fully allocated income statement using the step method. (The unallocated income statement is presented in Problem 15.) Indirect expenses will be allocated on the following bases: Indirect Expense Basis Insurance Book value of fixed assets Depreciation Square footage Property Operation & Maintena I ITO