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Social Media, Inc. (SMI) has two services for users. Toot!, which connects people with students who...

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Accounting

Social Media, Inc. (SMI) has two services for users. Toot!,which connects people with students who are looking for tutoringservices, and TiX, which can be used to buy, sell, or exchangeevent tickets. For the following year, SMI expects the followingresults.

Toot!TiXTotal
Users9,00015,00024,000
Revenues$1,200,000$800,000$2,000,000
Engineering hours10,0006,00016,000
Engineering cost$240,000$360,000$600,000
Administrative costs$480,000

Required:

a. Compute the predetermined overhead rate usedto apply administrative costs to the two services assuming SMI usesthe engineering hours to allocate administrativecosts.

b. Based on the rates computed in requirement(a), what is the profit for each service?

C. Compute the predetermined overhead rate usedto apply administrative costs to the two services assuming SMI usesthe engineering cost to allocate administrative costs.

D. Based on the rates computed in requirement(c), what is the profit for each service?

Answer & Explanation Solved by verified expert
3.6 Ratings (290 Votes)
a Predetermined overhead rate Total Administrative Costs Total Engineering hours 480000 16000 30 per    See Answer
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