8.

Social Media, Inc. (SMI) has two services for users. Toot!, which connects tut-ors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results.

	Toot!		TiX		Total
Users		8,900		16,600		25,500
Revenues	$	1,450,000	$	1,200,000	$	2,650,000
Engineering hours		7,375		5,375		12,750
Engineering cost	$	402,500	$	521,875	$	924,375
Administrative costs					$	739,500

Required:

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering cost to allocate administrative costs.

Predetermined overhead rate. %

b. Based on the rates computed in requirement (a), what is the profit for each service?

Service	Profit
Toot!
TiX