Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows:
Front office personnel (desk, clerks, etc.) | $ | 8,800 | |
Administrative and executive salaries | 4,400 | ||
Interest on resort purchase | 3,400 | ||
Advertising | 600 | ||
Housekeeping | 2,400 | ||
Depreciation on reservations computer | 80 | ||
Room maintenance | 880 | ||
Carpet-cleaning contract | 50 | ||
Contract to repaint rooms | 440 | ||
$ | 21,050 | ||
Pine Valley | Oak Glen | Mimosa | Birch Glen | Total | |||||||||||
Revenue (000s) | $ | 6,150 | $ | 9,190 | $ | 10,180 | $ | 7,530 | $ | 33,050 | |||||
Square feet | 57,550 | 79,475 | 43,345 | 86,795 | 267,165 | ||||||||||
Rooms | 86 | 122 | 66 | 174 | 448 | ||||||||||
Assets (000s) | $ | 95,795 | $ | 141,875 | $ | 75,075 | $ | 59,650 | $ | 372,395 | |||||
Required:
1. Based on annual revenue, what amount of the central office costs are allocated to each resort?
2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools?
3. Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort
1. Based on annual revenue, what amount of the central office costs are allocated to each resort?
Pine Valley
Oak Glen
Mimosa
Birch Glen
Total
2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools?
Allocation Base Total
Revenue
Square Feet
Number of Rooms
Assets
3. Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort?
Allocation Base Pine Valley Oak Glen Mimosa Birch Glen Total
Revenue
Square feet
Number of rooms
Assets
Total cost allocated
Part 1 | |||||
Resorts | Revenue | Allocation of Costs | Computation | ||
Pine Valley | $ 6,150 | $ 3,917 | $21,050*6,150/33,050 | ||
Oak Glen | $ 9,190 | $ 5,853 | $21,050*9,190/33,050 | ||
Mimosa | $ 10,180 | $ 6,484 | $21,050*10,180/33,050 | ||
Birch Glen | $ 7,530 | $ 4,796 | $21,050*7,530/33,050 | ||
Total | $ 33,050 | $ 21,050 | |||
Part 2 | |||||
Revenue | Square Feet | Rooms | Assets | ||
Fron Office Personnel | $ 8,800 | ||||
Administrative and executive salaries | $ 4,400 | ||||
Interest on Resort Purchase | $ 3,400 | ||||
Advertising | $ 600 | ||||
Housekeeping | $ 2,400 | ||||
Depreciation on Reservation computer | $ 80 | ||||
Room maintainance | $ 880 | ||||
Carpet-Cleaning contract | $ 50 | ||||
Contract to repaint rooms | $ 440 | ||||
Total | $ 13,800 | $ 2,450 | $ 1,320 | $ 3,480 | |
Allocation of Office Costs | On the basis of: | ||||
Resorts | Revenue | Square Feet | Rooms | Assets | |
Pine Valley | $ 2,568 | $ 3,837 | $ 4,251 | $ 3,144 | |
Oak Glen | $ 528 | $ 729 | $ 397 | $ 796 | |
Mimosa | $ 253 | $ 359 | $ 194 | $ 513 | |
Birch Glen | $ 895 | $ 1,326 | $ 702 | $ 557 | |
Total Cost allocated | $ 4,244 | $ 6,251 | $ 5,544 | $ 5,010 | |
Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts...
Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows: Front office personnel (desk, clerks, etc.) $ 10,900 Administrative and executive salaries 5,300 Interest...
Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows: Front office personnel (desk, clerks, etc.) $ 10,900 Administrative and executive salaries 5,300...
Woodland Hotels, Inc., operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows: Front office personnel (desk, clerks, etc.) $ 11,500 Administrative and executive salaries 5,500 Interest...
i need help with requirement 2 Carpet-cleaning contract Contract to repaint rooms 50 570 $28,710 Pine Valley $ 9,150 Birch Glen Oak Glen $ 13,675 88,765 Mimosa $ 15,150 48,415 Total $ 49,180 298,420 Revenue (00es) Square feet Rooms $ 11,205 96,950 64, 290 86 122 66 174 448 $415,965 Assets (000s) $107,015 $ 83,855 $158,465 $ 66,630 Required: 1. Based on annual revenue, what amount of the central office costs are allocated to each resort? 2. Suppose that the...
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