Konig Enterprises, Ltd., owns and operates three restaurants in Vancouver, B.C.

Question

Konig Enterprises, Ltd., owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrative expenses to the three restaurants on the basis of sales dollars. During 2013, the fixed administrative expenses totaled $950,000. These expenses were allocated as follows:

Restaurants

During 2014, the following year, the Imperial Garden restaurant increased its sales by $10 million. The sales levels in the other two restaurants remained unchanged. The company’s 2014 sales data were as follows:

Restaurants

Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three restaurants for 2014.

Compare your allocation from (1) above to the allocation for 2013 and determine the increase or decrease in allocation? (Decreases should be indicated by a minus sign.)

Konig Enterprises, Ltd., owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrative expenses to the three restaurants on the basis of sales dollars. During 2013, the fixed administrative expenses totaled $950,000. These expenses were allocated as follows:

Explanation / Answer

Rick’s Harborside Imperial Garden Ginger Wok Total % .34 .44 .22 1 Allocation i 2014 323000    [950000*.34] 418000    [950000*.44] 209000   [950000*.22] 950000 in 2013 418000 294500 237500 950000 Ans to part 2 decrease increase decrease

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