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Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students...

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Accounting

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 9,000 15,000 24,000

Revenues $1,200,000 $800,000 $2,000,000

Engineering hours 10,000 6,000 16,000

Engineering cost $240,000 $360,000 $600,000

Administrative costs $480,000

Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses thenumber of usersto allocate administrative costs.

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

ompute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses thenumber of usersto allocate administrative costs.

Predetermined overhead rate per user

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

Service Profit

Toot! TiX

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