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would you expect the restaurant rsquo s overall operating income to increase or decr 592821

a. Calculate the contributory income percentage for each of the three divisions.

b. If there were a shift of $16,000 in sales revenue from the banquet area to the dining room, would you expect the restaurant’s overall operating income to increase or decrease? Explain your reasoning to support your answer.

c. Assuming that the shift of sales revenue does occur, there is no change in total sales revenue and undistributed (indirect) costs. Other direct costs will remain fixed. Wages and salaries costs must be recalculated. Calculate the new operating income for each department and the restaurant’s new total operating income. In calculating such items as cost of sales percentage, gross margin percentage, and wages and salaries, round your percentages to the first decimal place.

d. After allocating the indirect costs, would you now consider closing any of the divisions? Why or why not?

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