In order to keep increasing the profits of the Central Adventure we recommend

In order to keep increasing the profits of the

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In order to keep increasing the profits of the Central Adventure, we recommend separating the overhead cost based on department allocation instead of evenly distributed in three parks. Different from the current evenly distribution, department allocation approach is similar to the plantwide approach except that the cost pools are formed for each department(park) rather than for the entire plant. The total overhead cost will stay the same and the department allocation approach will break the overhead cost into various department(park) cost pool. This method will give the company more flexibility between each of the three parks.
In conclusion, we advise Central Adventure to support Mr. Lieberman’s decision to rejecting the roller coaster investment which can potentially reduce the company’s profit. We suggest Central Adventure give Mr. Copperfield more time to prove himself before making any raise for him because of his performance. We also suggest Central Adventure keep Central Treetops in order to maintain the high level of profits. Changing to the department allocation approach could be a solution for the future development of the Central Treetops. We believe that these adjustments/ suggestions will help Central Adventures to have a more successful future. Sincerely Figure 1: Income Statement for Central Adventures
Funland Waterworld Treetops Central Adventures Sales $59,460,690 $10,913,500 $1,965,600 $72,339,790 COGS $41,325,180 $7,312,045 $943,488 $49,580,713 Gross margin $18,135,510 $3,601,455 $1,022,112 $22,759,077 Allocated overhead $847,640 $847,640 $847,640 $2,542,920 Selling and

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