service department is viewed as a cost-recovery operation, while the sales of vehicles is viewed as the income-producing activity
E9-38( similar to) p. 363
Cabe ' s Delicious Treats is a gourmet dessert restaurant in Miami. Brigitte Cabe, the sole proprietor, expanded to a second location in Daytona Beach, 3 years ago. Recently, Cabe decided to enroll in a PhD program and retire from active management of the individual restaurants but continues to oversee the entire company. She hired a manager for each restaurant.
In 20X3, each had sales of $ 750,000. The Daytona Beach restaurant is still pricing lower than the Miami restaurant to establish a customer base. Variable expenses run 45 % of sales for the Miami restaurant and 55 % of sales for the Daytona Beach restaurant.
Each manager is responsible for the rent and some other fixed costs for his or her restaurant. These costs amounted to $ 130,000 for the Miami restaurant and $ 75,000 for the one in Daytona Beach. The difference is primarily due to lower rent in Daytona Beach. In addition, several costs, such as advertising, legal services, accounting, and personnel services, were centralized. The managers had no control of these expenses, but some of them directly benefited the individual restaurants. Of the $ 380,000 cost in this category, $ 135,000 related to Miami and $ 155,000 to Daytona Beach, where most of the additional cost in Daytona Beach is due to the cost of extra advertising to build up its customer base. The remaining $ 90,000 was general corporate overhead
E10-27( similar to) p. 396
You are given the following data: