Moonlight Bar and Grill Income Statement For the Year Ended December 31, 2020 ...
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Accounting
| Moonlight Bar and Grill Income Statement For the Year Ended December 31, 2020 | ||||
| Dining Room | Bar Area | Outdoor Patio | Total | |
| Sales Revenue | $206,900 | $156,800 | $186,000 | $549,700 |
| Direct Costs | $164,000 | 145,000 | 152,000 | $461,000 |
| Contribution Income | $42,900 | $11,800 | $34,000 | $88,700 |
| Indirect Costs | $63,000 | |||
| Operating Income | $25,700 |
The owner wants to allocate indirect costs to each area based on square foot, to analyze how each segment of the restaurant is performing. the dining room is 3,300 square feet, the bar area is 1,500 square feet, and the outdoor patio is 1,200 square feet.
a. The owner of the restaurant has an offer from a smoothie shop to rent the bar area for $7,000 per year. rent does not include any of the indirect costs; they will have to be absorbed by the other segments. Prepare a revised income statement and advise the owner if this is an acceptable or not.
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