|
Solution
15.4
Departmental
Income Statement (Departmental profit method)
|
|
Cinema
|
Restaurant
|
Bowling
|
Total
|
|
|
€'000
|
€'000
|
€'000
|
€'000
|
|
|
|
|
|
|
|
Sales
|
2,100
|
3,000
|
1,200
|
6,300
|
|
Less
cost of sales
|
|
|
|
0
|
|
Opening
stock
|
100
|
120
|
80
|
300
|
|
Purchases
|
1,050
|
1,200
|
700
|
2,950
|
|
closing
stock
|
80
|
105
|
65
|
250
|
|
Cost
of sales
|
1,070
|
1,215
|
715
|
3,000
|
|
Gross
profit
|
1,030
|
1,785
|
485
|
3,300
|
|
|
|
|
|
|
|
Less
direct expenses
|
|
|
|
|
|
Wages
|
200
|
150
|
130
|
480
|
|
Repairs
and main
|
50
|
40
|
20
|
110
|
|
|
250
|
190
|
150
|
590
|
|
Departmental
profit
|
780
|
1,595
|
335
|
2,710
|
|
|
|
|
|
|
|
Less
Indirect expenses
|
|
|
|
|
|
Rent
|
|
|
|
800
|
|
Light
and heat
|
|
|
|
150
|
|
Insurance
|
|
|
|
200
|
|
Admin.
And accounting
|
|
|
|
80
|
|
Personnel
|
|
|
|
200
|
|
Head
office costs
|
|
|
|
120
|
|
General
expenses
|
|
|
|
50
|
|
Depreciation
|
|
|
|
10
|
|
Canteen
costs
|
|
|
|
20
|
|
Indirect
expenses
|
|
|
|
1,630
|
|
Net
Profit
|
|
|
|
1,080
|
Departmental
Income Statement (Net Profit method)
|
|
|
|
Cinema
|
Restaurant
|
Bowling
|
Total
|
|
|
|
€'000
|
|
€'000
|
|
€'000
|
€'000
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
2,100
|
|
3,000
|
|
1,200
|
6,300
|
|
Less
cost of sales
|
|
|
|
|
|
|
0
|
|
Opening
stock
|
|
100
|
|
120
|
|
80
|
300
|
|
Purchases
|
|
1,050
|
|
1,200
|
|
700
|
2,950
|
|
closing
stock
|
|
80
|
|
105
|
|
65
|
250
|
|
|
|
1,070
|
|
1,215
|
|
715
|
3,000
|
|
Gross
profit
|
|
1,030
|
|
1,785
|
|
485
|
3,300
|
|
|
|
|
|
|
|
|
|
|
Less
direct expenses
|
|
|
|
|
|
|
|
|
Wages
|
|
200
|
|
150
|
|
130
|
480
|
|
Repairs
and main
|
|
50
|
|
40
|
|
20
|
110
|
|
|
|
|
|
|
|
|
|
|
Less
Indirect expenses
|
|
|
|
|
|
|
|
|
Rent
|
33.33%
|
266.6
|
40%
|
320.0
|
26.67%
|
213.4
|
800
|
|
Light
and heat
|
33.33%
|
50.0
|
40%
|
60.0
|
26.67%
|
40.0
|
150
|
|
Insurance
|
33.33%
|
66.7
|
40%
|
80.0
|
26.67%
|
53.3
|
200
|
|
Admin
& accounting
|
50%
|
40.0
|
37.50%
|
30.0
|
12.50%
|
10.0
|
80
|
|
Personnel
|
50%
|
100.0
|
37.50%
|
75.0
|
12.50%
|
25.0
|
200
|
|
Head
office costs
|
33.33%
|
40.0
|
47.62%
|
57.1
|
19.05%
|
22.9
|
120
|
|
General
expenses
|
33.33%
|
16.7
|
47.62%
|
23.8
|
19.05%
|
9.5
|
50
|
|
Depreciation
|
33.33%
|
3.3
|
47.62%
|
4.8
|
19.05%
|
1.9
|
10
|
|
Canteen
costs
|
50%
|
10.0
|
37.50%
|
7.5
|
12.50%
|
2.5
|
20
|
|
|
|
843.289
|
|
848.216
|
|
528.495
|
2,220
|
|
Net
Profit
|
|
186.711
|
|
936.784
|
|
-43.495
|
1,080
|
Appropriateness
of some of the apportionment methods – key points
Can
be a very subjective process.
The
best way to apportion costs is on the basis of the greatest
benefit- i.e. the department
who gets the greatest benefit from the cost must take the
greatest amount of
the cost.
This
makes the apportionment process very time consuming and
expensive.
More
appropriate basis may be for depreciation to be based on the book
value of assets
in
each department.
Insurance
of the assets based on the book value of the assets.
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