Question 1

Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below.

	Harborview				Crystal Coast					Total
Revenue (000s)	$	3,750				$	6,250			$	10,000
Square feet		80,000					240,000				320,000
Rooms		64					150				214
Assets (000s)	$	110,000				$	430,000			$	540,000

The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows.

Cost Driver	Amount Allocated
Revenue	$	200,000
Square feet		100,000
Rooms		500,000
Assets (000s)		3,200,000

What is the operating profit of the Crystal Coast Resort, using revenue as an allocation base?

Question 2

Norio Manufacturing uses powdered plastics (PPS) to manufacture a high-pressure board used in a digital equipment product, Flex 10. Information concerning its operation in June is as follows:

Budgeted units of Flex 10 for June		7,000
Budgeted usage of PPS		63,000	pounds
Actual number of units of Flex 10 manufactured		6,000
PPS purchased		84,000	pounds
PPS used		59,000	pounds
Total actual cost of PPS used	$	392,940
Direct materials usage varianceunfavorable	$	42,000	unfavorable

The actual purchase price per pound of PPS used (rounded to two decimal places) is: