Refer to the data in Exercise 6-43.

Required

a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the engineering hours to allocate administrative costs.
b. Based on the rates computed in requirement (a), what is the profit for each service?

Exercise 6-43

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Toot! TiX Total Users 9,000 15,000 24,000 Revenues $ 1,200,000 $800,000 $2,000,000 Engineering hours Engineering cost Administrative costs 10,000 6,000 16,000 $ 240,000 $ 600,000 $ 480,000 $360,000