Bradbo Owned Two Adjoining Restaurants, the Pork Palace and the Chicken

question 33

Multiple Choice

Bradbo owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each restaurant was treated as a profit center for performance evaluation purposes. Although the restaurants had separate kitchens, they shared a central baking facility. The principal costs of the baking area included materials, supplies, labor, and depreciation and maintenance on the equipment.
Bradbo allocated the monthly costs of the baking facility to the two restaurants based on the number of tables served in each restaurant during the month using dual allocation and equal sharing of fixed costs. In April, the costs were $30,000, of which $16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut served 3,600 tables.
The amount of the joint cost that should have been allocated to the Chicken Hut in April is calculated to be:

• A) $8,000.
• B) $14,300.
• C) $15,700.
• D) $18,000.
• E) $22,000.

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Definitions:

Equal Satisfaction

A principle in consumer choice theory that suggests consumers allocate their resources to maximize satisfaction or utility.

Indifference

A state where a consumer has no preference between two or more choices.

Utility

An economic term referring to the total satisfaction received from consuming a good or service.

Indifference Curve

A graphical representation showing different combinations of goods or services among which a consumer is indifferent, implying no preference for one combination over another, given their utility or satisfaction remains constant.