Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows: Front office personnel (desk, clerks, etc.) Administrative and executive salaries Interest on resort purchase Advertising Housekeeping Depreciation on reservations computer Room maintenance Carpet-cleaning contract Contract to repaint rooms $ 9,800 4,900 3,900 600 2,900 80 980 50 490 $23,700 Birch Glen Revenue (2005) Square feet Rooms Assets (2005) Pine Valley $ 7,550 60,140 86 $100,110 Oak Glen $ 11,285 83,020 122 $ 148,205 Mimosa $ 12,500 45,280 66 $ 78,425 $ 9,245 90,690 174 $ 62,325 Total $ 40,580 279, 130 448 $389,065 Required: 1. Based on annual revenue, what amount of the central office costs are allocated to each resort? 2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools? 3. Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort? Required 1 Required 2 Required 3 Based on annual revenue, what amount of the central office costs are allocated to each resort? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest dollar.) Total Pine Valley Oak Glen Mimosa Birch Glen 4,409 $ 6,591 $ 7.300 $ 5.399 $ Allocated cost $ 23,699 Required 1 Required 2 Required 3 Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools? (Enter your answers in thousands of dollars.) $ Allocation Base Revenue Square feet Number of rooms Assets $ Total 15,300 X 2,950 X 1.470 X 3,980 X $ $ Required 1 Required 2 Required 3 Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest dollar.) $ $ $ Mimosa 4,713 479 X $ Birch Glen 3,486 % 958 X $ Allocation Base Revenue Square feet Number of rooms Assets Total cost allocated Pine Valley 2,847 X 636 282 1,024 X 4.789 Oak Glen 4.255 X 877 X 400 X 1,516 % 7,048 Total 15,301 2,950 1.470 571 X 217 X 802 > 6,211 638 5.653 3,980 23,701 $ $ $ $ $
