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Social Media, Inc. (SMI) has two services for users. Toot!, which connects t.ut.ors 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		9,500			17,100			26,600
Revenues	$	1,500,000		$	1,280,000		$	2,780,000
Engineering hours		7,650			5,650			13,300
Engineering cost	$	439,125		$	558,375		$	997,500
Administrative costs							$	798,000

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
Engineering hours		7,650			5,650			13,300
Users		9,500			17,100			26,600
Engineering-hour related administrative cost							$	114,380
User-related administrative cost							$	683,620

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?

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