Answer:
a. Predetermined administration costs - $ 54 per engineering hours
b. Profit per Toot - $ 648,075
Profit per Tix $ 326,450
Explanation:
Computation for predetermined overhead rate for admin costs
Estimated administration costs $ 629,100
Engineering hours - Toot - 6,825
Engineering hours - Tix - <u>4,825</u>
Total engineering hours 11,650
Predetermined rate for administration costs
$ 629,100/ 11,650 hours $ 54 per hour
Computation of total profit for each service
Administration costs - Toot = 6,825 hours * $ 54 per hour = $ 368,550
Administration costs - Tix = 4,825 hours * $ 54 per hour = $ 260,550
Toot Tix
$ $
Revenues <u>1,350,000</u> <u>1,040,000</u>
Engineering costs 333,375 453,000
Allocation of admin costs <u>368,550 </u> <u>260,550</u>
Total costs <u>701,925 </u> <u>713,550</u>
Profit per service 648,075 326,450
