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 10,700 18,100 28,800 Revenues $ 1,600,000 $ 1,440,000 $ 3,040,000 Engineering hours 8,200 6,200 14,400 Engineering cost $ 516,500 $ 635,500 $ 1,152,000 Administrative costs $ 921,600 Required: Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of usersto allocate administrative costs. 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 Users 10,700 18,100 28,800 Revenues $ 1,600,000 $ 1,440,000 $ 3,040,000 Engineering hours 8,200 6,200 14,400 Engineering cost $ 516,500 $ 635,500 $ 1,152,000 Administrative costs $ 921,600 Required: Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of usersto allocate administrative costs. Based on the rates computed in requirement (a), what is the profit for each service?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 |
|
10,700 |
|
18,100 |
|
28,800 |
||||||
|
Revenues |
$ |
1,600,000 |
$ |
1,440,000 |
$ |
3,040,000 |
||||||
|
Engineering hours |
|
8,200 |
|
6,200 |
|
14,400 |
||||||
|
Engineering cost |
$ |
516,500 |
$ |
635,500 |
$ |
1,152,000 |
||||||
|
Administrative costs |
|
|
|
|
$ |
921,600 |
||||||
Required:
- Compute the predetermined
overhead rate used to apply administrative costs to the two services assuming SMI uses the number of usersto allocate administrative costs. - Based on the rates computed in requirement (a), what is the profit for each service?
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