Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot!TiXTotalUsers 12,500 19,600 32,100Revenues$1,750,000$1,460,000$3,210,000Engineering hours 12,200 8,200 20,400Engineering cost$295,000$415,000$710,000Administrative costs $1,123,500 Required:a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs.b. Based on the rates computed in requirement (a), what is the profit for each service?

Here are the answers for the questions posted above.

Answered: a. Compute the predetermined overhead…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results.

	Toot!	TiX	Total
Users		12,500		19,600		32,100
Revenues	$	1,750,000	$	1,460,000	$	3,210,000
Engineering hours		12,200		8,200		20,400
Engineering cost	$	295,000	$	415,000	$	710,000
Administrative costs					$	1,123,500

Required:

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs.

b. Based on the rates computed in requirement (a), what is the profit for each service?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Introduction to Data analytics for accounting

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions