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The Yoga Factory has daily operating costs of $2,000 to run its facility. The facility is open 16 hours per day. The entire $2,000 is
The Yoga Factory has daily operating costs of $2,000 to run its facility. The facility is open 16 hours per day. The entire $2,000 is a fixed cost. Yoga Factory can rent out its facility at the following prices: Time Slot Name: Slot hours: Hours per day: Rental Price (per hour): Rental Price (per day): Early Morning Morning 6am-9am 9am-noon 3 hours 3 hours $10 $10 $30 $30 Afternoon noon-6pm 6 hours $ 50 $300 Evening 6pm-10pm 4 hours Note#1 Note#1 Instead of renting out the facility, the Yoga Factory can run their own programming: Time Slot Name: Early Morning Morning Afternoon Programming Name: Sunrise Yoga Morning Yoga Dance Yoga Additional Costs (per day): $ 49 $ 21 $ 520 Programming Revenue (per day) $ 75 $ 61 $ 1,000 Evening Evening Yoga $ 400 $ 1,800 (Note#1: The market rental price for the evening timeslot is unknown. Management is not interested in renting the facility to others in the evening because they prefer to run Evening Yoga). Required A. Name the possible method(s) to allocate the $2,000 daily operating costs, as discussed in class and in the Horngren textbook. (1 mark) B. Based on your response in Part A, identify which method(s) is(are) not possible to use in this situation. (1 mark) C. The Early-morning and Morning time slots generates minimal revenues. Briefly explain how and why you may want to treat this time slot differently than other time slots when considering how to allocate the $2,000 daily operating costs. (1 mark) D. Allocate the $2,000 daily costs based on the most appropriate method. Marks for this question are based on your choice of method used to allocated costs and consideration for treating any of the time slots differently than other time slots as identified in part C
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