Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribed

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! 8,900 $1,450,000 7,375 $ 402, 500 Tix 16,600 $1,200,000 5,375 $ 521,875 Total 25,500 $2,650,000 12,750 $ 924,375 $ 739,500 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! 7,375 8,900 Tix 5,375 16,600 Engineering hours Users Engineering-hour related administrative cost User-related administrative cost Total 12,750 25,500 $ 107,100 $ 632,400 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 system to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service? Complete this question by entering your answers in the tabs below. Required A Required B 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 system to allocate administrative costs. (Round your answers to 2 decimal places.) Predetermined Overhead Rate Engineering-hour related administrative cost User-related administrative cost per engineering-hour per user Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Based on the rates computed in requirement (a), what is the profit for each service? (Do not round intermediate calculations.) Profit Service Toot! TX

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

Survey Of Accounting

Authors: Carl S. Warren

1st Edition

0538870850, 9780538870856

More Books

Students also viewed these Accounting questions

Question

What is a trial balance? Why is it prepared?

Answered: 1 week ago

Question

3. Call on low achievers as often as you do high achievers.

Answered: 1 week ago

Question

Explain the causes of indiscipline.

Answered: 1 week ago

Question

Explain the factors influencing wage and salary administration.

Answered: 1 week ago