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.) $9,600

Administrative and executive salaries 4,800

Interest on resort purchase 3,800

Advertising 600

Housekeeping 2,800

Depreciation on reservations computer 80

Room maintenance 960

Carpet-cleaning contract 50

Contract to repaint rooms 480

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$23,170

Pine Valley Oak Glen Mimosa Birch Glen Total

Revenue (000s) $7,350 $10,985 $12,170 $9,000 $39,505

Square feet 59,625 82,350 44,900 89,925 276,800

Rooms 86 122 66 174 448

Assets (000s) $99,250 $147,005 $77,770 $61,800 $385,825

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

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.)

Pine Valley Oak Glen Mimosa Birch Glen Total

Allocated cost _________ ________. _______ _________ _____

Required 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? (Enter your answers in thousands of dollars.)

Allocation Base Total

Revenue _____

Square feet ______

Number of rooms ______

Assets ______

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.)

Allocation Base Pine Valley Oak Glen Mimosa Birch Glen Total

Revenue _______ ________ _______ ________ _______

Square feet _______ ________ _______ ________ ________

Assets _______ ________ _______ ________ ______

Total cost allocated _______ ________ _______ ________ ______