Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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) $ 3,500 $ 6,500 $ 10,000
Square feet 75,000 225,000 300,000
Rooms 60 140 200
Assets (000s) $ 160,000 $ 640,000 $ 800,000

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 $ 245,000
Square feet 150,000
Rooms 600,000
Assets (000s) 3,005,000

Using the information regarding the allocation of the $4 million to the four cost drivers, determine the amount of cost to be allocated to the Harborview Resort.

Multiple Choice

a) $1,061,000.

b) $904,250.

c) $1,516,000.

d) $722,000.

e) $1,697,000.

image text in transcribed

Mukple Choice $1,061000 $904.250 $1,516,000 $722,000 $1,697,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing The Modern Hospital

Authors: B. J Hall

1st Edition

0130516724, 978-0130516725

More Books

Students also viewed these Accounting questions