Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000s) $ 3,500 $ 6,500 $ 10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000s) $ 214,000 $ 856,000 $ 1,070,000 The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated Revenue $ 275,000 Square feet 195,000 Rooms 600,000 Assets (000s) 2,930,000 Using the information regarding the allocation of the $4 million to the four cost drivers, determine the amount of cost to be allocated to the Harborview Resort.
Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000s) $ 3,500 $ 6,500 $ 10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000s) $ 214,000 $ 856,000 $ 1,070,000 The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated Revenue $ 275,000 Square feet 195,000 Rooms 600,000 Assets (000s) 2,930,000 Using the information regarding the allocation of the $4 million to the four cost drivers, determine the amount of cost to be allocated to the Harborview Resort.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below.
| Harborview | Crystal Coast | Total | |
|---|---|---|---|
| Revenue (000s) | $ 3,500 | $ 6,500 | $ 10,000 |
| Square feet | 75,000 | 225,000 | 300,000 |
| Rooms | 60 | 140 | 200 |
| Assets (000s) | $ 214,000 | $ 856,000 | $ 1,070,000 |
The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the
| Cost Driver | Amount Allocated |
|---|---|
| Revenue | $ 275,000 |
| Square feet | 195,000 |
| Rooms | 600,000 |
| Assets (000s) | 2,930,000 |
Using the information regarding the allocation of the $4 million to the four cost drivers, determine the amount of cost to be allocated to the Harborview Resort.
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