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!TiXTotalUsers 12,500 19,600 32,100Revenues$1,750,000$1,460,000$3,210,000Engineering hours 12,200 8,200 20,400Engineering cost$295,000$415,000$710,000Administrative costs $1,123,500 Required:a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs.b. Based on the rates computed in requirement (a), what is the profit for each service?

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Answered: a. Compute the predetermined overhead…

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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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		12,500		19,600		32,100
Revenues	$	1,750,000	$	1,460,000	$	3,210,000
Engineering hours		12,200		8,200		20,400
Engineering cost	$	295,000	$	415,000	$	710,000
Administrative costs					$	1,123,500

Required:

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs.

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

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a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?