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Manama Enterprises, Ltd, owns and operates three shopping malls in Bahrain. The company allocates its foxed administrative expenses to the three Shopping Malls on
Manama Enterprises, Ltd, owns and operates three shopping malls in Bahrain. The company allocates its foxed administrative expenses to the three Shopping Malls on the basis of sales dollars. Last year the foxed administrative expenses totaled 1,000,000 and were allocated as follows Shopping Malls Particular Riffa SH-1 Jufair Issa town SH-2 SH-3 Total Total sales-Last Year $12,000,000 $9,000,000 $7,000,000 $28,000,000 Percentage of total sales 43% 32.14% 25.00% 100% Allocation (based on the above percentages) $428,571 $321,429 $250,000 $1,000,000 This year the Jufair SH-2 increased its sales by eight million. The sales levels in the other two restaurants remained unchanged. Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three shopping malls for this year. 2. Calculate the change in each Shopping malls allocated cost from last year to this year As the manager of the Julair, how would you feel about the amount that has been charged to you for this year? 3 Comment on the usefulness of sales dollars as an allocation base.
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