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Please answer both questions and show steps Laura was evaluating the profitability of her bike shop, which sells bicycles, skateboards, and trisbee golt items. Since
Please answer both questions and show steps
Laura was evaluating the profitability of her bike shop, which sells bicycles, skateboards, and trisbee golt items. Since the trisbee golf segment was new, she wasn't surprised to see a segment loss after allocating her selling, general, and administrative costs to the three product areas using one rate, based on percentage of sales revenue. After looking more closely, though, she realized the selling, general, and administrative costs came from three main activity areas and could be allocated using more specific rates based on cost drivers as follows. If the frisbee golf line requires 30 hours of management time and 150 square feet of space, and it generates just 4% of total revenues for the shop, how much of these total SG\&A costs were initially allocated to the golf line? Costs allocated \$ How much of these costs would have been allocated had Laura used activity-based rates? Costs allocated \$Step by Step Solution
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