Social Media, Inc. (SMI) has two services for users. Toot!, which connects TA 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		12,500		19,600		32,100
Revenues	$	1,750,000	$	1,460,000	$	3,210,000
Engineering hours		12,200		8,200		20,400
Engineering cost	$	295,000	$	415,000	$	710,000
Administrative costs					$	1,123,500

Required:

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs.

b. Based on the rates computed in requirement (a), what is the profit for each service?

Service	Profit
Toot!
TiX

Answ,er A: 35% CORRECT

Answer B: Answer b is incorrect

Toot= 1,017,500

TiX= 359,000