7 Users Revenues Engineering hours Engineering cost Administrative costs Toot! 12,000 $1,800,000 17,000 $ 340,000 Tix 18,000 $1,800,000 11,000 $ 390,000 Total 30,000 $3,600,000 28,000 $ 730,000 $ 530,000 The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! 17,000 12,000 Tix 11,000 18,000 Engineering hours Users Engineering-hour related administrative cost User-related administrative cost Total 28,000 30,000 $ 140,000 $ 390,000 SMI thought that maybe there should be three types of administrative costs. They felt that some of the costs in the User-related pool were more related to revenue than to users. Specifically, they revised their breakdown of administrative costs as follows. Engineering-hour related administrative cost User-related administrative cost Revenue-related administrative cost Total administrative cost $ 140,000 210,000 180,000 $ 530,000 Required: a. Compute the predetermined overhead rate used to apply the three administrative costs pools to the two services assuming SMI uses the the proposed two-stage cost system to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compute the predetermined overhead rate used to apply the three administrative costs pools to the two services assuming SMI uses the the proposed two-stage cost system to allocate administrative costs. (Round your final answer to 2 decimal places.) $ Engineering-hour related administrative cost User-related administrative cost Revenue-related administrative cost Predetermined Overhead Rate 5.00 per engineering-hour 13.00 X per user 8.00 X % of revenue $ Users Revenues Engineering hours Engineering cost Administrative costs Toot! 12,000 $1,800,000 17,000 $ 340,000 Tix 18,000 $1,800,000 11,000 $ 390,000 Total 30,000 $3,600,000 28,000 $ 730,000 $530,000 The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Engineering hours Users Engineering-hour related administrative cost User-related administrative cost Toot! 17,000 12,000 Tix 11,000 18,000 Total 28,000 30,000 $ 140,000 $ 390,000 SMI thought that maybe there should be three types of administrative costs. They felt that some of the costs in the User-related pool were more related to revenue than to users. Specifically, they revised their breakdown of administrative costs as follows. Engineering-hour related administrative cost User-related administrative cost Revenue-related administrative cost Total administrative cost $ 140,000 210,000 180,000 $ 530,000 Required: a. Compute the predetermined overhead rate used to apply the three administrative costs pools to the two services assuming SMI uses the the proposed two-stage cost system to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Based on the rates computed in requirement (a), what is the profit for each service? Service Toot! TIX Profit $ 1,261,000 949,000 %