Woodland Hotels, Inc., operates four resorts in the heavily wooded areas of nort

Question

Woodland Hotels, Inc., operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows:

1) Based on annual revenue, what amount of the central office costs are allocated to each resort? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest dollar.)

2) Suppose that the current method were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools? (Enter your answers in thousands of dollars.)

3)Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest dollar.)

Woodland Hotels, Inc., operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows:

Explanation / Answer

2. The costs to be collected in each of the four cost pools is given below:

3. For allocating costs to various resorts besed on different allocation base, we first find the allocation rate for each cost pool as given below:

Based on the above allocation rate, we find the costs allocated to the resorts as given below:

revenue sq feet no of rooms assets Front desk personnel $8,000 Admin & executive salaries $4,000 Interest on resort purchase $3,000 Advertising $600 Housekeeping $2,000 Depreciation on reservations computer $80 Room maintenance $800 carpet cleaning contract $50 contract to repaint rooms $400 Total cost to be allocated $4,680 $450 $10,800 $3,000

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