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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: $12,700 5,900 4,900 600 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 3,900 80 1,270 50 590 $29,990 Birch Glen Total Revenue (2005) Square feet Rooms Assets (2005) Pine Valley $ 9,550 65,325 86 $ 108,745 Oak Glen $ 14,270 90,205 122 $161,030 Mimosa $ 15,810 49,195 66 $ 85,205 $ 11,690 98,545 174 $ 67,725 $ 51,320 303,270 448 $422,705 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? 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 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.) Total Allocation Base Revenue Square feet Number of rooms Assets 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.) Pine Valley Oak Glen Mimosa Birch Glen Total Allocation Base Revenue Square feet Number of rooms Assets Total cost allocated $ $ 0 $ 0 $ 0
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