Quick Clean sends workers to homes and offices to perform cleaning services for special occasions. There are 4 different outlets and one headquarters for the company. Headquarters' costs are allocated to outlets using a rate of 30% of revenue. The income statement for one of the outlets for last year was as follows:
Revenue (500 visits)$200,000
Costs:
Direct labour wages ($160 per visit)$80,000
Rent and insurance 20,000
Variable selling and administrative 10,000
Fixed selling and administrative 35,000
Allocated headquarters costs 60,000 205,000
Income $( 5,000)
a)Quick Clean wants to know whether this outlet should be dropped. Identify the relevant cash flows and make a recommendation to management about this decision.
b)List one qualitative factor that might affect this type of decision.

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The Answer of Quick Clean sends workers to homes and offices to perform cleaning services for special occasions. There are 4 different outlets and one headquarters for the company. Headquarters' costs are allocated to outlets using a rate of 30% of revenue. The income statement for one of the outlets for last year was as follows:
Revenue (500 visits)$200,000
Costs:
Direct labour wages ($160 per visit)$80,000
Rent and insurance 20,000
Variable selling and administrative 10,000
Fixed selling and administrative 35,000
Allocated headquarters costs 60,000 205,000
Income $( 5,000)
a)Quick Clean wants to know whether this outlet should be dropped. Identify the relevant cash flows and make a recommendation to management about this decision.
b)List one qualitative factor that might affect this type of decision.

Quick Clean Sends Workers to Homes and Offices to Perform