Visit a local movie theater and check out both its concession area and its showing areas.

The manager of a theater must confront questions such as:

• How much return do we earn on concessions?

• What types of movies generate the greatest sales?

• What types of movies generate the greatest net income?

Required

Assume that you are the new accounting manager for a 16-screen movie theater. You are to set up a responsibility accounting reporting framework for the theater.

1. Recommend how to segment the different departments of a movie theater for responsibility reporting.

2. Propose an expense allocation system for heat, rent, insurance, and maintenance costs of the theater.