Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Woodland Hotels Incorporated operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort:

Woodland Hotels Incorporated 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.) $ 10,000
Administrative and executive salaries 5,000
Interest on resort purchase 4,000
Advertising 600
Housekeeping 3,000
Depreciation on reservations computer 80
Room maintenance 1,000
Carpet-cleaning contract 50
Contract to repaint rooms 500
$ 24,230
Pine Valley Oak Glen Mimosa Birch Glen Total
Revenue (000s) $ 7,750 $ 11,580 $ 12,830 $ 9,490 $ 41,650
Square feet 60,66083,73545,65591,455281,505
Rooms 8612266174448
Assets (000s) $ 100,975 $ 149,485 $ 79,080 $ 62,855 $ 392,395
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?

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_2

Step: 3

blur-text-image_3

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

Financial Accounting

Authors: Kermit D. Larson, Paul B. W. Miller

5th Edition

0256091935, 978-0256091939

More Books

Students also viewed these Accounting questions

Question

What training is required for the position?

Answered: 1 week ago

Question

When scan of Linux target, what is the last item in the stand for?

Answered: 1 week ago

Question

Can negative outcomes associated with redundancy be avoided?

Answered: 1 week ago

Question

Understand the key features of recruitment and selection policies

Answered: 1 week ago