Hotel ABC has 3 departments with their respective income statement shown below:

Question

Hotel ABC has 3 departments with their respective income statement shown below: DEPARTMENTS F&B; ROOMS RETAIL Sales Direct Expenses NET INCOME $2,800,000 1,100,000 $1,700,000 $1,550,000 850,000 $700,000 650,000 $300,000 $350,000 The hotel also incurred the following indirect expenses Administrative Maintenance Property Taxes 520,000 S 30,000 S 80,000 Insurance Marketing Utilities 40,000 $ 80,000 S 240,000 The management of Hotel ABC has decided to distribute the above indirect expenses to the 3 departments using the below criteria: a. Administrative and Marketing Expense are to be distributed base on sales mix. (Departmental sales to total sales) The Insurance, Utilities and Property Taxes Expense are to be distributed based on the square footage occupied by each department. The square footage occupied by each department is as follows b. Rooms = 80,000 sq ft F&B; = 15,000 sq ft Retail 5,000 sq ft c. The Maintenance Expenses are to be distributed equally among 3 departments ROOM S2,800,000 $ 1100,000 1,700,000 F&B; S1,550,000 S850,000 RETAIL $650,000 $300,000 $350,000 Sales Direct Expenses ept. Income $700,000 Indirect Expenses Administrative Marketing Insurance Property Taxes Utilities Maintenance Total Indirect Expenses Net Income (after indirect expenses)

Explanation / Answer

Room F&B Retail Sales                  2,800,000           1,550,000                     650,000 Direct expenses                  1,100,000               850,000                     300,000 Dept Income                  1,700,000               700,000                     350,000 Indirect Expenses Administrative(2800 : 1550 : 650)                      291,200               161,200                       67,600 Marketing (2800 : 1550 : 650)                        44,800                 24,800                       10,400 Insurance (80 : 15 : 5)                      192,000                    6,000                         2,000 Property Tax (80 : 15 : 5)                        64,000                 12,000                         4,000 utilities (80 : 15 : 5)                      192,000                 36,000                       12,000 Maintenance(Equally)                        10,000                 10,000                       10,000 Total Indirect Expenses                      794,000               250,000                     106,000 Net Income                      906,000               450,000                     244,000

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.