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Introduction to Costs Chapter 3 The restaurant owner took another look at the various indirect costs and, on further analysis, discovered that some indirect costs would change, as shown below. Current Indirect Costs if Bar Area Costs Rented Administrative Expense $32,000 $29,000 Advertising Expense 12,000 8,000 Insurance Expense 6,000 4,200 Repairs Expense 3,000 2,300 Utilities Expense 10,000 7,500 Total $63.000 $51.000 If the bar area is not operated, it is estimated that outdoor patio sales revenue will decrease by 30% and direct costs will decrease by $20,000. Dining room sales revenue and direct costs will not be impacted. Prepare a revised income statement. With this new information, should the owner accept the offer? Introduction to Costs Chapter 3 The restaurant owner took another look at the various indirect costs and, on further analysis, discovered that some indirect costs would change, as shown below. Current Indirect Costs if Bar Area Costs Rented Administrative Expense $32,000 $29,000 Advertising Expense 12,000 8,000 Insurance Expense 6,000 4,200 Repairs Expense 3,000 2,300 Utilities Expense 10,000 7,500 Total $63.000 $51.000 If the bar area is not operated, it is estimated that outdoor patio sales revenue will decrease by 30% and direct costs will decrease by $20,000. Dining room sales revenue and direct costs will not be impacted. Prepare a revised income statement. With this new information, should the owner accept the offer? Introduction to Costs Chapter 3 The restaurant owner took another look at the various indirect costs and, on further analysis, discovered that some indirect costs would change, as shown below. Current Indirect Costs if Bar Area Costs Rented Administrative Expense $32,000 $29,000 Advertising Expense 12,000 8,000 Insurance Expense 6,000 4,200 Repairs Expense 3,000 2,300 Utilities Expense 10,000 7,500 Total $63.000 $51.000 If the bar area is not operated, it is estimated that outdoor patio sales revenue will decrease by 30% and direct costs will decrease by $20,000. Dining room sales revenue and direct costs will not be impacted. Prepare a revised income statement. With this new information, should the owner accept the offer? Introduction to Costs Chapter 3 The restaurant owner took another look at the various indirect costs and, on further analysis, discovered that some indirect costs would change, as shown below. Current Indirect Costs if Bar Area Costs Rented Administrative Expense $32,000 $29,000 Advertising Expense 12,000 8,000 Insurance Expense 6,000 4,200 Repairs Expense 3,000 2,300 Utilities Expense 10,000 7,500 Total $63.000 $51.000 If the bar area is not operated, it is estimated that outdoor patio sales revenue will decrease by 30% and direct costs will decrease by $20,000. Dining room sales revenue and direct costs will not be impacted. Prepare a revised income statement. With this new information, should the owner accept the offer

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