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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 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 Users 14,900 Revenues $1,950,000 Engineering hours Engineering cost 10,125 18,250 $ 830,625 $1,779,375 $1,423,500 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 10,125 14,900 18,250 36,500 Engineering hours 8,125 Users 21,600 Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 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?

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 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 Users 14,900 Revenues $1,950,000 Engineering hours Engineering cost 10,125 18,250 $ 830,625 $1,779,375 $1,423,500 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 10,125 14,900 18,250 36,500 Engineering hours 8,125 Users 21,600 Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 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?

FINANCIAL ACCOUNTING
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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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 $1,950,000 10,125 830,625 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 18,250 $1,779,375 $1,423,500 Users 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 8,125 21,600 Engineering hours 10,125 14,900 18,250 36,500 Users Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 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 Based on the rates computed in requirement (a), what is the profit for each service? (Do not round intermediate calculations.) Service Profit Toot! TIX < Required A Required B >
Transcribed Image Text: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 $1,950,000 10,125 830,625 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 18,250 $1,779,375 $1,423,500 Users 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 8,125 21,600 Engineering hours 10,125 14,900 18,250 36,500 Users Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 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 Based on the rates computed in requirement (a), what is the profit for each service? (Do not round intermediate calculations.) Service Profit Toot! TIX < Required A Required 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 14,900 $1,950,000 10,125 830,625 21,600 $2,000,000 8,125 948,750 36,500 $3,950,000 18,250 $1,779,375 $1,423,500 Users 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 10,125 14,900 18,250 36,500 189,800 $1,233,700 Engineering hours 8,125 21,600 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 | per engineering-hour per user Engineering-hour related administrative cost User-related administrative cost < Required A Required B >
Transcribed Image Text: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 $1,950,000 10,125 830,625 21,600 $2,000,000 8,125 948,750 36,500 $3,950,000 18,250 $1,779,375 $1,423,500 Users 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 10,125 14,900 18,250 36,500 189,800 $1,233,700 Engineering hours 8,125 21,600 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 | per engineering-hour per user Engineering-hour related administrative cost User-related administrative cost < Required A Required B >
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