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 14,900 $ 880,000 4,275 $ 389,625 Users 6,200 $1,250,000 6,275 $ 269,750 21,100 $2,130,000 10,550 $ 659,375 $ 527,500 Revenues Engineering hours Engineering cost Administrative costs The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! Tix Total Engineering hours 6,275 6, 200 10,550 21,100 $ 80,180 $ 447,320 4,275 14,900 Users Engineering-hour related administrative cost User-related administrative cost

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 14,900 $ 880,000 4,275 $ 389,625 Users 6,200 $1,250,000 6,275 $ 269,750 21,100 $2,130,000 10,550 $ 659,375 $ 527,500 Revenues Engineering hours Engineering cost Administrative costs The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! Tix Total Engineering hours 6,275 6, 200 10,550 21,100 $ 80,180 $ 447,320 4,275 14,900 Users Engineering-hour related administrative cost User-related administrative cost

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consumer Credit Counseling Services

Credit counseling teaches consumers about credit, budgeting, money management, and debt management. The counselor ensures that consumers can pay off their debts without declaring bankruptcy. Counselors also assist the negotiator, who negotiates with creditors on behalf of their clients to reduce interest rates on outstanding debt. Counselors can offer credit counseling to customers before or after they take on debt. Consumer Credit Counseling Services (CCCS) is a non-profit organization that offers credit counseling services. Some organizations can also be for profit. This type of organization comprises a group of professionals who are skilled negotiators.

Question

Need Assistance with A &B

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
6,200
$1, 250,000
6,275
$ 269,750
14,900
$ 880,000
21,100
$2,130,000
10,550
$ 659,375
$ 527,500
Users
Revenues
Engineering hours
Engineering cost
Administrative costs
4,275
$ 389,625
The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits.
The company is considering using Engineering Hours and Users as the allocation base. Additional information follows.
Toot!
6,275
6, 200
Tix
Total
Engineering hours
4, 275
14,900
10,550
21,100
$ 80,180
$ 447,320
Users
Engineering-hour related administrative cost
User-related administrative cost
Required:
a. Compute the predetermined overhead rate used to apply the two administrative costs pools to the two services assuming SMI uses
the proposed two-stage cost system to allocate administrative costs.
b. Based on the rates computed in requirement (a), what is the profit for each service?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the predetermined overhead rate used to apply the two administrative costs pools to the two services assuming SMI
uses the proposed two-stage cost system to allocate administrative costs. (Round your answers to 2 decimal places.)
Predetermined Overhead Rate
Engineering-hour related administrative cost
per engineering-hour
User-related administrative cost
per user
< RequiredA
Required B >

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