DOLCI Exhibit 1 DOLCI INCOME STATEMENT ( IN MILLIONS) TOTAL COUNTER CUSTOM RESTAURANT FROZEN SALES CAKES SALES Revenues Total revenue $119,000 $32,000 $15,000 $42,000 $30,000 Direct costs Materials 35,300 12,800 4,500 10,500 7,500 Marketing and sales 2,610 10 100 1,500 1,000 Total Direct Costs 37,910 12,810 4,600 12,000 8,500 Revenue Less Direct Costs 81,090 Indirect operating expenses General overhead (occupancy, administration) 35,600 Production staff 35,700 Delivery 9,520 Total indirect operating expenses 80,820 Income before Profit Center Salaries 270 Profit Center Salaries Net Income to Shareholder(s) $266 Page 1 of 3DOLCI Exhibit 2 CUSTOM PRODUCTION STAFF ( Hours) TOTAL COUNTER RESTAURANT SALES FROZEN SALES CAKES General labor 200 110 310 280 900 Pastry Chefs and Culinary 220 20 80 60 60 Art and Design 82 5 70 7 0 Total Direct Labor Hours 1,202 225 260 377 340 Exhibit 3 SIZE OF GENERAL OVERHEAD RESOURCE COST POOL COST DRIVER POOL Facility costs (property taxes, depreciation) $12,642 Square feet of space Administration, purchasing and sales support 5,676 Number of purchase orders Utilities 17,282 Estimated kilowatt usage Total $35,600 Exhibit 4 COUNTER CUSTOM RESTAURANT GENERAL OVERHEAD COST DRIVER TOTAL SALES CAKES SALES FROZEN Square feet 30,000 16,976 7,820 2,602 2,602 Number of purchase orders 164 64 38 31 31 Estimated kilowatt usage 662,700 375,000 127,000 82,750 77,950 Page 2 of 3DOLCI Exhibit 5 PRODUCTION STAFF $ General Laborers $24,990 Pastry Chefs and Culinary 8,925 Art and Design 1,785 Total Production Staff $35,700 Exhibit 6 DELIVERY (Mileage) CUSTOM RESTAURANT TOTAL COUNTER SALES CAKES FROZEN SALES 16,274 4,800 2,750 3,200 5,524REQUIRED 1) Prepare the revised set of cost estimates and prot-center Income Statements using the Direct- Labor Hour approach. Method 1 allocation. 2) Prepare the revised set of cost estimates and prot-center Income Statements using the Multiple Cost Driver / Activity-Based Costing approach, Method 2 allocation. 3) Analyze the newly produced information and assess its implications for the managers. a. What decisions might managers make with this new information? b. What management action, if any, would you suggest? Prepare your case response using the five steps of strategic decision making. Only steps one through four are relevant since time-series data is not available