Question
Save & EXIL Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that
Save & EXIL 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. Revenue (000s) Square feet Rooms Assets (000s) Harborview $ 3,500 75,000 60 $ 6,500 225,000 140 Crystal Coast Total $ 10,000 300,000 200 $100,000 $400,000 $500,000 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 Revenue Square feet Rooms Assets (000s). Amount Allocated $ 200,000 100,000 600,000 3,100,000 What is the operating profit of the Crystal Coast Resort, using revenue as an allocation base
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