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 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 Users 14,900 Revenues $1,950,000 Engineering hours Engineering cost 10,125 18,250 $ 830,625 $1,779,375 $1,423,500 Administrative costs The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! Tix Total 10,125 14,900 18,250 36,500 Engineering hours 8,125 Users 21,600 Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 Required: a. Compute the predetermined overhead rate used to apply the two administrative costs pools to the two services assuming SMI uses the proposed two-stage cost system to allocate administrative costs. b. 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 21,600 $2,000,000 8,125 $ 948,750 36,500 $3,950,000 Users 14,900 Revenues $1,950,000 Engineering hours Engineering cost 10,125 18,250 $ 830,625 $1,779,375 $1,423,500 Administrative costs The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! Tix Total 10,125 14,900 18,250 36,500 Engineering hours 8,125 Users 21,600 Engineering-hour related administrative cost User-related administrative cost $ 189,800 $1,233,700 Required: a. Compute the predetermined overhead rate used to apply the two administrative costs pools to the two services assuming SMI uses the proposed two-stage cost system to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?

Name: Hello, I need help solving this accounting problem. Social Media, Inc.
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Description: Hello, I need help solving this accounting problem. Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, andTiX, which can be used to buy, sell, or exchange event ticke

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 15E: Ethical Behavior Consider the following scenario between Dave, a printer, and Steve, an assistant in...

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