Q.11. It is common for strip mall owners to allocate to their tenants' general overhead costs such as snow clearing, security, and parking lot maintenance in one of two ways. The first method involves allocating these costs on the basis of the square metres each tenant operates. The second method involves allocating these costs on the basis of the number of annual transactions made by each tenant. At Charleswood Square, there are three tenants. The 7-Eleven takes up 150 square metres, Tim Hortons takes up 235 square metres, and Quiznos takes up 110 square metres. Last year, 7-Eleven had 350,400 transactions, Tim Hortons had 657,000 transactions, and Quiznos had 197,100 transactions. Total overhead costs for Charleswood Square last year were $\$ 25,980$. Determine which method of allocation each tenant would prefer and how much of a savings in percentage its preferred method would represent relative to the other allocation method.

Step 1 ：Calculate the total square meters and total transactions for all tenants. Total square meters = 150 (7-Eleven) + 235 (Tim Hortons) + 110 (Quiznos) = 495 square meters. Total transactions = 350,400 (7-Eleven) + 657,000 (Tim Hortons) + 197,100 (Quiznos) = 1,204,500 transactions.

Step 2 ：Calculate the cost per square meter and cost per transaction. Cost per square meter = Total overhead costs / Total square meters = $25,980 / 495 = $52.48 per square meter. Cost per transaction = Total overhead costs / Total transactions = $25,980 / 1,204,500 = $0.0216 per transaction.

Step 3 ：Calculate the overhead costs for each tenant under both methods. For 7-Eleven: Cost (square meter method) = 150 * $52.48 = $7,872.73. Cost (transaction method) = 350,400 * $0.0216 = $7,557.82. For Tim Hortons: Cost (square meter method) = 235 * $52.48 = $12,333.94. Cost (transaction method) = 657,000 * $0.0216 = $14,170.91. For Quiznos: Cost (square meter method) = 110 * $52.48 = $5,773.33. Cost (transaction method) = 197,100 * $0.0216 = $4,251.27.

Step 4 ：Determine which method each tenant would prefer. 7-Eleven would prefer the transaction method because $7,557.82 < $7,872.73. Tim Hortons would prefer the square meter method because $12,333.94 < $14,170.91. Quiznos would prefer the transaction method because $4,251.27 < $5,773.33.

Step 5 ：Calculate the percentage savings of the preferred method relative to the other method. For 7-Eleven: Savings = (($7,872.73 - $7,557.82) / $7,872.73) * 100 = 4.00%. For Tim Hortons: Savings = (($14,170.91 - $12,333.94) / $14,170.91) * 100 = 12.96%. For Quiznos: Savings = (($5,773.33 - $4,251.27) / $5,773.33) * 100 = 26.36%.

Step 6 ：Final Answer: The 7-Eleven would prefer the transaction method, which would represent a savings of approximately \(\boxed{4.00\%}\) relative to the square meter method. Tim Hortons would prefer the square meter method, which would represent a savings of approximately \(\boxed{12.96\%}\) relative to the transaction method. Quiznos would prefer the transaction method, which would represent a savings of approximately \(\boxed{26.36\%}\) relative to the square meter method.