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 14,900 21,600 36,500 Revenues $ 1,950,000 $ 2,000,000 $ 3,950,000 Engineering hours 10,125 8,125 18,250 Engineering cost $ 830,625 $ 948,750 $ 1,779,375 Administrative costs $ 1,423,500 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service? Required A Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs. Predetermined overhead rate per engineering-hour Required B Based on the rates computed in requirement (a), what is the profit for each service? Service Profit Toot! TiX
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 14,900 21,600 36,500 Revenues $ 1,950,000 $ 2,000,000 $ 3,950,000 Engineering hours 10,125 8,125 18,250 Engineering cost $ 830,625 $ 948,750 $ 1,779,375 Administrative costs $ 1,423,500 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service? Required A Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs. Predetermined overhead rate per engineering-hour Required B Based on the rates computed in requirement (a), what is the profit for each service? Service Profit Toot! TiX
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 6-45 (Algo) Predetermined Overhead Rates and Product Profitability (LO 6-3, 4)
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 | 14,900 | 21,600 | 36,500 | |||
| Revenues | $ | 1,950,000 | $ | 2,000,000 | $ | 3,950,000 |
| Engineering hours | 10,125 | 8,125 | 18,250 | |||
| Engineering cost | $ | 830,625 | $ | 948,750 | $ | 1,779,375 |
| Administrative costs | $ | 1,423,500 | ||||
Required:
a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs.
b. Based on the rates computed in requirement (a), what is the profit for each service?
- Required A
Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs.
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- Required B
Based on the rates computed in requirement (a), what is the profit for each service?
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