Question
dining room bar area outdoor patio total sales revenue $206900 156800 186000 549700 direct costs 164000 145000 152000 461000 contribution income 42900 11800 34000 88700
dining room | bar area | outdoor patio | total | |||||
sales revenue | $206900 | 156800 | 186000 | 549700 | ||||
direct costs | 164000 | 145000 | 152000 | 461000 | ||||
contribution income | 42900 | 11800 | 34000 | 88700 | ||||
indirect cost | 63000 | |||||||
operation income | 25700 |
the owner wants to allocate indrect costs to each area based on square footage to analyse how each segments of the restaurants is performing. the dining room 3300 square foot, the bar area is 1500 square foot and the outdoor patio is 1200 square foot .
required
A) allocate the indirect costs as indicated?
B) the owner of restaurant has an offer from smoothie shop to rent the bar area for $7000 per year. rent does not include any of the indirect costs; they will have to be absorbed by the other segments. prepare a revised income statement and advise the owner if this if an acceptable offer or not?
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