Question.2929 - Chapter 21 assignment Instructions Home Station is a national home improvement chain with more than 100 stores throughout the country. The manager of each store receives a salary plus a bonus equal to a percent of the store’s net income for the reporting period. The following net income calculation is on the Denver store manager’s performance report for the recent monthly period. In previous periods, the bonus had also been 0.5%, but the performance report had not included any charges for the home office expense, which is now assigned to each store as a percent of its sales. Home office expense allocates the cost of the Corporate office for the company. Required Assume that you are the national office manager. Write a one-half page memorandum to your store managers explaining why home office expense is in the new performance report. You will be graded on how well you address the questions. Addressing the questions involves identifying relevant facts, applying the chapter concepts,, and answering each question completely. Proper APA formatting is expected and required (cited sources, reference page, etc.). Supplement and synthesize your analysis with outsides scholarly sources. For assistance with APA citations, please visit the following links: The American Psychological Association Website: http://www.apastyle.org/ The APA site has numerous links (see “most popular”), but you may want to view the tutorial if you are completely new to APA: http://www.apastyle.org/learn/tutorials/basics-tutorial.aspx This assignment will be submitted for plagiarism detection. Do not copy or paste any part of your submission from any other source, not even your text book. If you must copy a phrase, or definition, it must be in quotation marks and cited, see APA above. Failure to do so will result in a violation of the BC honesty policy.
Answer Below:
To: Store Manager of HOME STATION From: National Office Manager, HOME STATION Date: October 18, 2013 Subject: Inclusion of the Home Office Expenses This is with regard to the inclusion of the Home Office Expenses in the performance report for each and every store (Rubenstein, 2012). The Home Office Expenses will be 3% of the total sales of the store. The Home Office Expenses will basically provide for the cost of the Corporate Office of the company. The business of providing home improvement is primarily a service. All these services are not provided by the central corporate office of Home Station but the work has been divided through 100 stores throughout the country. So in reality all of the work of providing the service is done through the retail outlets. So, the retail outlets in their performance report can show the various expenses they have incurred and the total revenues that they have earned from their activities (Mejorada, 2004). But such a facility is not available for the Central Corporate office since they do not perform any revenue generating activities. But on the other hand they do incur expenditures for the maintenance of the office and various other expenses such as electricity, phone, stationery and other petty expenses required in the day to day activity. Since the corporate office does not have any income of its own as all the revenue is earned by the chain of stores throughout the country (Rubenstein, 2012). Thus, to write off this portion of the expenses the company needs revenue. This is the reason that the company has allocated the Home Office Expenses to each and every store in the country. Moreover, the expenses have not been apportioned in any haphazard manner but as a portion of the sales of the company. This seems to be the most efficient manner of allocating general corporate expenses to different stores (Mejorada, 2004). To summarize, the reason why home office expenses is being charged to all the stores as a percent of sales is to distribute or allocate the costs. This is no manner of unnecessarily reducing the profits of the store but to account for the general office expenses. Best, National Office Manager Home StationMore Articles From Accounting
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