Woodland Hotels Inc. operates four resorts in the heavily woodedareas of northern California. The resorts are named after thepredominant trees at the resort: Pine Valley, Oak Glen, Mimosa, andBirch Glen. Woodland allocates its central office costs to each ofthe four resorts according to the annual revenue the resortgenerates.
| Front office personnel | 10900 |
| Administrative and executive salaries | 5300 |
| Interest on resort purchase | 4300 |
| Advertising | 600 |
| Housekeeping | 3,300 |
| Depreciation on reservations computer | 80 |
| Room maintenance | 1,090 |
| Carpet-cleaning contract | 50 |
| Contract to repaint rooms | 530 |
|
$26,150 |
| Pine Valley | Oak Glen | Mimosa | | Total |
|---|
| Revenue (000s) | 8350 | 12480 | 13825 | 10,225 | 44,880 |
| Square feet | 62215 | 85890 | 46835 | 93,820 | 288,760 |
| Rooms | 86 | 122 | 66 | 174 | 448 |
| Assets (000s) | 103565 | 153335 | 81120 | | 402,500 |
| | | | | |
Required: 1. Based on annual revenue, what amount of the centraloffice costs are allocated to each resort?
2. Suppose that the current methods were replaced with a systemof four separate cost pools with costs collected in the four poolsallocated on the basis of revenues, assets invested in each resort,square footage, and number of rooms, respectively. Which costsshould be collected in each of the four pools?
3. Using the cost pool system in requirement 2, how much of thecentral office costs would be allocated to each resort?
