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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