Linday Dole just heard that the Skin Therapy division of Bobby Donnel SpaTower is being considered for closure. Lindsay has been with SpaTower for ten years and has managed the department well. She has increased revenue steadily over the years, has rajsed the service quality.

The owner informs her that the Skin Therapy division does not cover its costs every quarter, but that does not make sense to her. She has streamlined the divisions operation by cutting any wasted efforts and resources.

So, Lindsay decided to be proactive and ask to see the financial statements. She wanted to look them over and see how the numbers were adding up. Her division had losses each quarter so far this year. Now she does not know what to do. She does not want to go to the massage therapy manager because she and Hellen the manager have had a rivalry. Lindsay has always suspected that Hellen was trying to get her fired but she never had proof. As the manager for the massage therapy department Hellen is responsible for financial decisions such as the allocation for the cost that is shared between the two divisions. However, those are split 50/50 between the departments so there cannot be anything wrong. It looks like she may loose her job. Lindsay asks the controller for a set of fiancial statments for the whole firm and goes home to look them over.

what is your recommendation to Lindsay? choose one and explain with pros and cons

A. Yes, find another job. The financial statments are true. Here is the reason:

B. No, the financial statements are not accurate. This is what you could do:

Refer to financial statements in determining the answer.

Skin 132,000 Quartet Thal Massage 246.0005 180,000 1.301 2444995 178,874 5 Qui 2 Toe Massage 255 600 187,200 1.576 1.120 254,024 186,0305 Skin GA0005 40G 67.904 5 Skin GG,000 $ 376 65,004 S 676 Quarter Total Massar 624,000 $ 492,000 5 3.751 3,076 620,2495 488,924 5 131,394 Sales Director of Sales GreeMargin Espense 3,176 $ $ . 36,240 $ 3,600 100,000 $ 9,360 1,008 372 864 1.680 mon Casas Payroll SGA Lesedert Utilities murance Rest Other expenses Total Operating Expenses + ERIT Interest expenses Teps incurred Net profit 144.240 12.000 1,728 720 3,000 20,006 30,000 212 124 5 32,3755 1,122 14095 16,450 $ 108.000 $ 8,400 364 360 1,500 10,218 15,000 144 3425 34,532 5 911 3048 26,574 5 144.240 $ 12.960 2,016 744 3,360 28,080 32.100 223,500 5 30,5245 1,318 13,846 15,361 $ 360 1,500 10,218 15.000 67 2875 (2.158) 5 911 7048 (10, 116) S 36,240 S 3,600 1,008 372 1,680 14,040 16050 72,090 S (4,996) $ 659 6,923 (12,577) $ 343,200 $ 41,400 2,304 780 4,200 28,080 20.220 490,284 $ 129,965 $ 792 44,796 84,377 S 14,040 16,050 150 510 5 35,520 5 659 6,923 27,938 $ 66,000 4,800 1,152 390 2,100 14,040 35,160 123,642 7,602 277,200 5 36,600 1,152 390 2,100 14,040 35,160 3666425 122,2825 396 22,398 99,ABS $ $ 395 22,398 (15,112) $ You may change the allocation of the leased equipment, utilities, insurance, rent, other general expenses, interest expenses, and taxes incurred The default allocation is 50:50 according to the case Massage Skin Percentage allocation 50% 50%