Refer to the information in Exercise 6-46 for Harmon Recycling Services (HRS). The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. More detailed financial information for HRS follows: 

Data in Exercise 6-46

Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected operation in the next quarter follow.

Required

a. Compute the predetermined overhead rate used to apply the two general operating cost pools to the two centers (Eastside and Westside) assuming HRS uses the proposed two-stage cost system to allocate general operating costs.

b. Based on the rates computed in requirement (a), what is the surplus (revenues minus costs) for each service? 

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1 2 Clients 3 Revenues 4 Staff hours Staff costs A 5 6 General operating costs 7 B Eastside 25,000 $270,000 8,100 $99,000 C Westside 6,250 $180,000 2,700 $81,000 D Total 31,250 $450,000 10,800 $180,000 $270,000