Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 45

The controller of Fifties, a chain of drive-in restaurants, is considering modifying the monthly income statements by charging all costs relating to operations of the corporate headquarters to the individual restaurants in proportion to each restaurant's gross revenue. Do you think that this would increase the usefulness of the responsibility income statement in evaluating the performance of the restaurants or the restaurant managers? Explain.