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 15,500 22,100 37,600 Revenues $2,000,000 $2,080,000 $4,080,000 Engineering hours 10,4000 8,400 18,800 Engineering cost $ 881,000 $ 999,000 $1,880,000 Administrative costs $1,504,000 Required A: Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of users to allocate administrative costs. Predetermined overhead rate ________ per user 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 15,500 22,100 37,600
Revenues $2,000,000 $2,080,000 $4,080,000
Engineering hours 10,4000 8,400 18,800
Engineering cost $ 881,000 $ 999,000 $1,880,000
Administrative costs $1,504,000
Required A:
- Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of users to allocate administrative costs.
Predetermined overhead rate ________ per user
Required B:
- Based on the rates computed in requirement (a), what is the profit for each service?
Service Profit
Toot! _______
TiX _________
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