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Question A2 MyCarShop is a chain of used car-dealers with showrooms in Leicester, Derby and Chesterfield and a separate Head Office. The management accountant
Question A2 MyCarShop is a chain of used car-dealers with showrooms in Leicester, Derby and Chesterfield and a separate Head Office. The management accountant is reviewing the profitability of each showroom. The rent and staff costs incurred by each showroom can be saved in the event of closure. Marketing costs are allocated to each showroom, but would not be saved, if any shop were to close. Head office cost is charged at a rate of 7% of sales. The data regarding costs and sales revenues for each showroom are presented below. 000 Sales Leicester Derby Chesterfield 1,500 1,375 1,230 Cost of sales 1,250 1,240 1,184 Rent of 50 67 78 showroom Showroom staff 21 28 12 salaries Marketing costs 45 22 18 (a) What is the total relevant cost and attributable profit for each showroom? (b) Explain which, if any, of the showrooms should be closed down? Please state all assumptions [6 [ 4
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