Mac Fleetwood has managed a downtown store in Sydney for several years.The firm has 10 stores in several locations around the city.In the past,senior management noticed Mac Fleetwood'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 growing rapidly,while four other stores are having operating difficulties.
Required:
From the information presented,what do you think is the cause of Mac Fleetwood's reported decrease in earnings? How can this be corrected?
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Question

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The Answer of Mac Fleetwood has managed a downtown store in Sydney for several years.The firm has 10 stores in several locations around the city.In the past,senior management noticed Mac Fleetwood'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 growing rapidly,while four other stores are having operating difficulties.
Required:
From the information presented,what do you think is the cause of Mac Fleetwood's reported decrease in earnings? How can this be corrected?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Mac Fleetwood Has Managed a Downtown Store in Sydney for Several