Martini Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includesa 300-room hotel, a casino, and a restaurant. As Martini's new controller, your manager asks youto recommend the basis the hotel should use for allocating fixed overhead costs to the threedivisions in 2020. You are presented with the following income statement information for 2019:(Click the icon to view the data.)Requirement 1. Calculate division margins in percentage terms prior to allocating fixed overhead costs. (Round your answers to two decimal places, X.XX.)RestaurantCasinoHotel42.69 %Allocated fixed overhead costsOperating marginOperating margin %Data tableRevenuesDirect costsSegment marginDivision marginRequirement 2. Allocate indirect costs to the three divisions using each of the three allocation bases suggested. For each allocation base, calculate division operating margins after allocations, indollars and as a percentage of revenuesAllocate the indirect costs, then calculate the division operating margin in dollars and as a percentage of revenue for each segment.Begin with cost allocation based on direct costs. (Round percentages, including intermediate calculations, to two decimal places, X.XX%. Round dollar amounts to the nearest dollar. Use parenthesesor a minus sign for negative amounts.)$36.19 %Hotel7,848,745Print%HotelRestaurant$ 16,925,000 $ 6,150,000 $9,700,0007,225,000 $63.76 %RestaurantDone%Casino12,400,0003,924,600 4,493,2002,225,400 $ 7,906,800-CasinoYou are also given the following data on the three divisions.(Click the icon to view the data.)You are told that you may choose to allocate indirect costs based on one of the following:direct costs, floor space, or the number of employees. Total fixed overhead costs for 2019were $14,660,000.Read the requirements.%MartiniData tableFloor space (square feet)Number of employeesRequirementsHotel Restaurant115,00036023,00090Casino- X92,0004501. Calculate division margins in percentage terms prior to allocating fixedoverhead costs.2. Allocate indirect costs to the three divisions using each of the three allocationbases suggested. For each allocation base, calculate division operatingmargins after allocations, in dollars and as a percentage of revenues.3. Discuss the results. How would you decide how to allocate indirect costs tothe divisions? Why?4. Would you recommend closing any of the three divisions in the short run (andpossibly reallocating resources to other divisions) as a result of your analysis?If so, which division would you close and why?X

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Answered: Requirement 1. Calculate division…

Requirement 1. Calculate division margins in percentage terms prior to allocating fixed overhead costs. (Round your answers to two decimal places, X.XX.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 9EA: The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express...

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Nation's Capital Fitness, Incorporated, operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y= a + bx, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service 560 480 280 470 350 460 320 430 490 380 350 340 4,910 409 Maintenance cost Maintenance Costs $ 5,110 4,240 2,730 4,300 3,030 4, 120 3,000 3,590 4,000 3,220 3,170 3,070 $ 43,580 $ 3,632 PR 6-38 (Algo) Part 3 Compute the predicted maintenance cost... 3. Compute the predicted maintenance cost at 670 hours of activity. Answer is complete but not entirely correct. $ 49,192 X
Nation's Capital Fitness, Incorporated, operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y= a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service Variable maintenance cost 560 480 280 470 350 460 320 430 490 380 350 340 4,910 409 $ Maintenance Costs $ 5,110 4,240 2,730 4,300 3,030 4, 120 PR 6-38 (Algo) Part 2 What is the variable component of the maintenance cost? 2. Using your answer to requirement 1, what is the variable component of the maintenance cost? Note: Round your answer to 2 decimal places. 3,000 3,590…
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Nation’s Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firm’s controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm’s equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: (image below) Required:1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation’s Capital Fitness, Inc. Express the cost behavior pattern in equation form.2. Using your answer to requirement (1), what is the variable component of the maintenance cost?3. Compute the predicted maintenance cost at 590 hours of activity.4. Compute the variable cost per hour and the fixed cost per hour at 600 hours of activity. Explain why the fixed cost per hour could be…
Darren Dandy Auto Sales uses different media to advertise its products (television, radio, newspaper, Internet, and so on). At the end of 2019, the company president, Darren Douglas, decided that corporate headquarters would negotiate and pay for all advertising costs and allocate these costs to each of the company's four sales locations If managers had done the same advertising on their own, their advertising costs and the actual number of cars sold would be as follows: H (Click the icon to view the data.) based on number of vehicles sold. (Click the icon to vievw information about the east sales location.) Read the resuirements (Click the icon to view the advertising information.) Requirement 1. Show the amount of the 2020 advertising cost (S1,500,000) that would be allocated to each of the divisions under the following criteria: (a) Douglas' allocation method based on actual number of cars sold, (b) the stand-alone method based on the amounts divisions would have spent on their own…
Required information [The following information applies to the questions displayed below.] Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop an equation, in the form of Y= a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service 520 490 300 500 310 480 Monthly maintenance cost= 320 400 470 350 340 320 4,800 400 Maintenance Costs $ 4,470 4,260 2,820 4,350 2,960 4,200 3,000 3,600 4,050 3,300 3,160 3,030 $43,200 $3,600 Required: 1. Using the high-low method of cost estimation, estimate…
Required information [The following information applies to the questions displayed below] Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop an equation, in the form of Y=a+bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average "Rounded Hours of Maintenance Service 530 470 260 470 360 450 330 450 470 380 360 360 4,890 408- Maintenance Costs $ 5,068 4,220 2,800 4,330 2,970 4,140 3,100 3,510 4,010 3,200 3,250 3,040 $43,638 $ 3,637 Required: 1. Using the high-low method of cost estimation, estimate the behavior of the…