Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000s) $ 3,500 $ 6,500 $ 10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000s) $ 160,000 $ 640,000 $ 800,000 The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated Revenue $ 245,000 Square feet 150,000 Rooms 600,000 Assets (000s) 3,005,000 Using the information regarding the allocation of the $4 million to the four cost drivers, determine the operating profit of the Crystal Coast Resort. Multiple Choice $3,404,250. $2,793,000. $1,504,000. $2,056,000. $4,226,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below.

	Harborview		Crystal Coast	Total
Revenue (000s)	$	3,500			$	6,500	$	10,000
Square feet		75,000				225,000		300,000
Rooms		60				140		200
Assets (000s)	$	160,000			$	640,000	$	800,000

The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows.

Cost Driver	Amount Allocated
Revenue	$	245,000
Square feet		150,000
Rooms		600,000
Assets (000s)		3,005,000

Using the information regarding the allocation of the $4 million to the four cost drivers, determine the operating profit of the Crystal Coast Resort.

Multiple Choice

$3,404,250.
$2,793,000.
$1,504,000.
$2,056,000.
$4,226,000.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions