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 :