EXERCISE 8. Welcome Hotels is a chain of hotels serving business travelers. The chain has grown from one hotel in 2016 to five hotels. In 2020, the owner of the company decided to set up an internal Accounting Department to centralize control of financial information. The accounting office was opened in January 2020 by renting space adjacent to corporate headquarters. All hotels have been supplied with personal computers and internet access to transfer information to central accounting on a daily basis. The Accounting Department has budgeted fixed costs of P135,000 per year. Variable costs are budgeted at P20 per hour. In 2020, actual cost for the Accounting Department was P223,000. Further information is as follows: Actual Revenues Actual Hours of Accounting 2019 2020 2020 Hotel One P405,000 P420,000 1,475 Hotel Two 540,000 588,000 410 Hotel Three 432,000 364,000 620 Hotel Four 648,000 728,000 890 Hotel Five 675,000 700,000 450 Total P2,700,000 P2,800,000 1. Suppose the total actual costs of the Accounting Department are allocated on the basis of 2020 sales revenue. How much will be allocated to each hotel? 2. Suppose that Welcome Hotels views 2019 sales figures as a proxy for budgeted capacity of the hotels. Thus, fixed Accounting Department costs are allocated on the basis of 2019 sales, and variable costs are allocated according to 2020 usage multiplied by the variable rate. How much Accounting Department cost will be allocated to each hotel? 3. Comment on the two allocation schemes. Which hotels would prefer the method in Requirement 1? The method in Requirement 2? Explain