Manama Enterprises, Ltd, owns and operates three shopping malls in Bahrain. The company allocates its fixed...

 

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Manama Enterprises, Ltd, owns and operates three shopping malls in Bahrain. The company allocates its fixed administrative expenses to the three shopping malls on the basis of sales dollars. Last year the fixed administrative expenses totaled 4,000,000 and were allocated as follows Shopping Malls Riffa SH.1 Total sales-Last Year Percentage of total sales Allocation (based on the above percentages) $24,000,000 38% $1,520,000 Jufair SH:2 $22,000,000 35.00% $1,400,000 Issa town SH-3 $12,000,000 27.00% $1,080,000 Total $58,000,000 100% $4,000,000 This year the Jufair SH-2 increased its sales by $10 million. The sales levels in the other two restaurants remained unchanged Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three shopping malls for this year 2. Calculate the change in each shopping malls allocated cost from last year to this year. As the manager of the Jufair, how would you feel about the amount that has been charged to you for this year? 3. Comment on the usefulness of sales dollars as an allocation base. Manama Enterprises, Ltd, owns and operates three shopping malls in Bahrain. The company allocates its fixed administrative expenses to the three shopping malls on the basis of sales dollars. Last year the fixed administrative expenses totaled 4,000,000 and were allocated as follows Shopping Malls Riffa SH.1 Total sales-Last Year Percentage of total sales Allocation (based on the above percentages) $24,000,000 38% $1,520,000 Jufair SH:2 $22,000,000 35.00% $1,400,000 Issa town SH-3 $12,000,000 27.00% $1,080,000 Total $58,000,000 100% $4,000,000 This year the Jufair SH-2 increased its sales by $10 million. The sales levels in the other two restaurants remained unchanged Required: 1. Using sales dollars as an allocation base, show the allocation of the fixed administrative expenses among the three shopping malls for this year 2. Calculate the change in each shopping malls allocated cost from last year to this year. As the manager of the Jufair, how would you feel about the amount that has been charged to you for this year? 3. Comment on the usefulness of sales dollars as an allocation base.

Answer rating: 100% (QA)

Answer 1 Cost allocation on the basis of sales dollars Total sales This Year Percentage of total sal... View the full answer