Answer:
Instructions are below.
Explanation:
Giving the following information:
Toot! TiX Total
Users 17,900 24,100 42,000
Administrative costs $ 1,848,000
<u>We need to allocate administrative costs to each product. First, we need to calculate the predetermined overhead rate:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,848,000/42,000
Predetermined manufacturing overhead rate= $44 per user
<u>Now, we allocate overhead:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Toot!= 44*17,900= 787,600
TiX= 44*24,100= 1,060,400
<u>Finally, the gross profit for each service:</u>
Toot!:
Revenue= 2,200,000
Engineering cost= (1,096,250)
Administrative cost= (787,600)
Profit= $316,150
TiX:
Revenues= 2,400,000
Engineering cost= (1,213,750)
Administrative cost= (1,060,400)
Profit= $125,850
