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. Users Revenues Engineering hours Engineering cost Administrative costs Toot! 9,000 $1,350,000 10,000 $ 200,000 Tix 14,000 $700,000 $2,050,000 Total 23,000 7,500 $ 394,000 17,500 $ 594,000 $ 534,000 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. Engineering hours Toot! 10,000 TIX 7,500 Total 17,500 Users 9,000 14,000 23,000 Engineering-hour related administrative cost User-related administrative cost $140,000 $ 394,000 SMI thought that maybe there should be three types of administrative costs. They felt that some of the costs in the User-related pool were more related to revenue than to users. Specifically, they revised their breakdown of administrative costs as follows. Engineering-hour related administrative cost User-related administrative cost Revenue-related administrative cost Total administrative cost $140,000 230,000 164,000 $ 534,000