Question
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:
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 44,90089,925276,800
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 _______ ________ _______ ________ _______
Number of rooms _______ ________ _______ ________ _______
Assets _______ ________ ________ ________ ______
Total cost allocated _______ ________ _______ ________ ______
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