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Essay by 24  •  January 8, 2011  •  1,039 Words (5 Pages)  •  718 Views

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This case Museo de la casa, was prepared by Professor David W. Young. In this case there is a museum in which there are three departments, such as audio, video and portable communication devices. This museum received donations of a wide variety of appliances which it then organized into displaying the history of each appliance’s department. The in charge of this museum is Ricardo Delgado. This case study is about the income statement about all of the three departments. The audio department consists of record players, stereo tuners, CD players and radios. Video consists of televisions, hand-held cameras, and VCRs. Portable communication devices consist of cell phones and electronic pagers. The museum affords such types of department because it is being donated by patrons who visit the museum. Thus, the museum is in good condition and many people comes their and pray to god. But the problem is that there was a loss in the video department income statement. Thus this loss is to be found out, because the other two department’s income statement shows surplus amount comparing to last year. Sr. Delgado, the museum in charge said that if the department can’t cover all of its cost than we should get rid of it. In reaction to this Ernesto Gallardo, the video department’s manager is not pleased with this conclusion. He says that the income statement may show a loss but it misses a lot of important factors. First, it is just for three months, and a slow three months just comes after the holidays. Also in addition he said that the video department helps out the other department a lot. He says that people usually come to my department to look at the history of TVs, and they sometimes wander into the audio department or the communication department, where they purchases an additional entry tickets. The amount shown in exhibit 2 is one third of the total warehouse personnel payroll. The warehouse personnel were not assigned to any particular department. They worked for all three departments on most days. The main thing about video department is that, the products of video department are more expensive as of other department and also they are much more cumbersome to carry. And thus the personnel of the museum spent about one third of their time handling the video department’s items. In exhibit 2 there other amount was assigned to each department on the basis of its share of total revenues. The museum had two delivery trucks and each truck requires a driver and an assistant. When a delivery truck comes with items for museum it usually contains items for all of the three departments. In exhibit 2 it is shown about the salaries of department manager’s of all of the three departments. These were the cost of the museum central administration, such as the salary of the managing director, the salaries of the office staff, the museum’s accounting and legal departments, consulting fees, and other administrative items in the office. Each department is allocates a share of these costs based on its percentage of revenue. Also insurance is based on the museum’s inventory. It varied slightly depending on how fragile the items were. Seeing to all of these income statement, Juana Fuentes, the museum’s managing director, responded to Mr. Gallardo and raised some additional concerns. Juana says that let’s forget the loss of the video department. She said that video department’s revenue is helped by the audio and communications department also. Also she said that since we don’t have any other data to go on, let’s assume the first quarter is representative

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