Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results.

Toot! TiX Total

Users 14,300 21,100 35,400

Revenues $1,900,000 $1,920,000 $3,820,000

Engineering hours 9,850 7,850 17,700

Engineering cost $781,625 $899,875 $1,681,500

Administrative costs $1,345,200

The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits.

The company is considering using Engineering Hours and Users as the allocation base. Additional information follows.

Toot! TiX Total

Engineering hours 9,850 7,850 17,700

Users 14,300 21,100 35,400

Engineering-hour related administrative cost $180,540

User-related administrative cost $1,164,660

Required:

a.Compute the predetermined overhead rate used to apply the two administrative costs pools to the two services assuming SMI uses the proposed two-stage cost systemto allocate administrative costs. (Round your answers to 2 decimal places.)

b.Based on the rates computed in requirement (a), what is the profit for each service? (Do not round intermediate calculations.)