Problem:
Visit a local movie theater and check out both its concession area and its showing areas. The manager of a theater must confront questions such as: How much return do we earn on concessions? What types of movies generate the greatest sales? What types of movies generate the greatest net income? Required Assume that you are the new accounting manager for a 16-screen movie theater (ten of the auditoriums have 150 seats each; the other six auditoriums each have 400 seats). You are to set up a responsibility accounting reporting framework for the theater.
Required:
Question 1: Recommend how to segment the different departments of a movie theater for responsibility reporting.
Question 2: Propose an expense allocation system for heat, rent, insurance, and maintenance costs of the theater.
Note: Please show the work not just the answer.