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Author Question: Jonathan has managed a downtown store in a major metropolitan city for several years. The firm has ... (Read 72 times)

clmills979

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on: Mar 6, 2021
Jonathan has managed a downtown store in a major metropolitan city for several years. The firm has ten stores in varying locations. In the past, senior management noticed Jonathan's work and he has received very good annual evaluations for his management of the store. 

This year his store has generated steady growth in sales, but earnings have been deteriorating. After examining the monthly performance report generated by the company budgeting department, he noticed that increasing fixed costs is causing the decrease in earnings. 

Administrative corporate costs, primarily fixed costs, are allocated to individual stores each month based on actual sales for that month. Two of these stores are currently growing at a rapid pace, while four other stores are having operating difficulties. 

Required:
From the information presented, what do you think is the cause of Jonathan's reported decrease in earnings? How can this be corrected?
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by clmills979 on Mar 6, 2021

javimendoza7

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Reply #1 on: Mar 6, 2021
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clmills979

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Reply 2 on: Mar 6, 2021
Wow, this really help

Missbam101

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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