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PLEASE HELP ME SOLVE THIS! THANK YOU Direct Expenses Salaries, Sal Advertising Supplies Indirect Expenses Salaries, 0th Advertising auilding Rent PR Taxes Insurance Utilities Amortization

PLEASE HELP ME SOLVE THIS! THANK YOU
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Direct Expenses Salaries, Sal Advertising Supplies Indirect Expenses Salaries, 0th Advertising auilding Rent PR Taxes Insurance Utilities Amortization Net Income pan 2 Before deal pan 1 Pete 's Store Sales Gross Margin Other Revenue Total Revenue Expens Base (d Advertisin Miscell n Dept A 30,000 7,017 Dept 3 240, ooo 167,400 72, soo 1,600 (8,236) 5,040 Dept C Iso,ooo 100,600 59,400 23,000 1,200 1,240 3so 25 800 539 10,793 Part 2: Pete has an offer from someone who wants to take over all of the operations Department A in exchange for an annual fee of 530,000 He has asked pur opinion on whether this is a good deal or not You understand that all sales from, and the direct costs of, Department A will disappear The indirect costs are estimated to be oacted as follows if this offer is acceoted 400, ooo 268, ooo 132,000 30,000 162 ooo 57,600 3,600 2,840 800 41,000 1,500 19,000 3,504 1,283 3,360 3,250 2,000 74 897 22,303 22,850 Salaries, other decrease of 59,000 per year Advertising decrease 51,500 per year auilding rent no change in cost (allocation revised to C.4C%) Pavroll taxes decrease of 52,336 per year 5. Insurance decrease of 5517 per year (allocation revised to 3.48.4% C.51.6%) Utilities no change in cost (allocation revised to 350% C 50%) 7 Amortization no change in cost (allocation revised to 3417% CS-8.3%) 8. Miscellaneous no change in cost Make a revised departmentalized income statement for the remaining two departments and in total, with indirect costs fully allocated. Include the 530,000 fee income as the only fine item for Department A as there will be no costs for Department A, direct or indirect, associated with this new proposal. Thus, should Pete accept the offer? Allocation Breakdown: Allocation Amounts: Total 19.000 Dept Dept Advertisin Total 100% salaries 100% utilities Total 19.000 Building Rent 2.000 Miscellaneou Part 1 Part 2

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