The Marlin Hotel has two centralized support divisions, IT and Human resources (HR), and two major product
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Question:
The Marlin Hotel has two centralized support divisions, IT and Human resources (HR), and two major product divisions: Rooms and Suites. The hotel allocates the cost of HR based on head count and IT on number of IT hours. The following data pertain to usage patterns for the current period:
IT | HR | Rooms | Suites | ||
Costs incurred | $400,000 | $250,000 | $600,000 | $750,000 | |
Service provided by | |||||
IT | 500 | 500 | 1500 | ||
HR | 15 | 55 | 45 | ||
Number of Units | 520 | 140 |
The hotel uses the reciprocal method to allocate the costs of support departments to functional divisions.
Required:
a. What will be the cost of IT per IT hour charged to the functional divisions?
b. What will be the cost of human resources per head count charged to the functinal divisions?
c. What is the total cost per unit in the rooms division? Suites?
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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