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2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on
2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools? Show all work.
Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows: Front office personnel (desk, clerks, etc.) Administrative and executive salaries Interest on resort purchase Advertising Housekeeping Depreciation on reservations computer Room maintenance Carpet-cleaning contract Contract to repaint rooms $ 9,000 4,500 3,500 600 2,500 80 900 50 450 $21,580 Birch Glen Revenue (2005) Square feet Rooms Assets (2005) Pine Valley $ 6,350 58,065 86 $ 96,660 Oak Glen $ 9,490 80, 190 122 $143,160 Mimosa $ 10,515 43,720 66 $ 75,730 $ 7,775 87,560 174 $ 60,175 Total $ 34,130 269,535 448 $375,725Step by Step Solution
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