Weyden Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant As Weyden's new controller, your manager asks you to recommend the basis the hotel should use for allocating fixed overhead costs to the three divisions in 2017. You are presented with the following income statement information for 2016 (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, XXX) Restaurant Casino Hotel 50.52% Allocated fixed overhead costs Operating margin Operating margin% 45.68 % Hotel 7655256 2273744 % Division margin Requirement 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, in dollars and as a por Allocate 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, XXX%. Round dollar amounts to the nearest dollar. Use parentheses or a minus sign for negative amounts.) Weyden 63 30 % Restaurant 3393552 231848 Casino 3591192 4277108 14640000 6782700 Data table You are also given the following data on the three divisions. (Click the icon to view the data) Revenues Direct costs Segment margin 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 2016 were $14,640,000. Read the requirements $ Hotel 19,654,000 $ 9,725,000 9,929,000 S Restaurant 7,936,000 $ 4.310,600 3,625,400 $ Data table Casino 12.430,000 4.561,700 7,868,300 Floor space (square feet) Number of employees Requirements Print Hotel Restaurant Casino 75.000 15,000 60,000 160 200 Done 40 1. Calculate division margins in percentage terms prior to allocating fixed overhead costs 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, in dollars and as a percentage of revenues 3. Discuss the results. How would you decide how to allocate indirect costs to the divisions? Why?

Weyden Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant As Weyden's new controller, your manager asks you to recommend the basis the hotel should use for allocating fixed overhead costs to the three divisions in 2017. You are presented with the following income statement information for 2016 (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, XXX) Restaurant Casino Hotel 50.52% Allocated fixed overhead costs Operating margin Operating margin% 45.68 % Hotel 7655256 2273744 % Division margin Requirement 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, in dollars and as a por Allocate 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, XXX%. Round dollar amounts to the nearest dollar. Use parentheses or a minus sign for negative amounts.) Weyden 63 30 % Restaurant 3393552 231848 Casino 3591192 4277108 14640000 6782700 Data table You are also given the following data on the three divisions. (Click the icon to view the data) Revenues Direct costs Segment margin 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 2016 were $14,640,000. Read the requirements $ Hotel 19,654,000 $ 9,725,000 9,929,000 S Restaurant 7,936,000 $ 4.310,600 3,625,400 $ Data table Casino 12.430,000 4.561,700 7,868,300 Floor space (square feet) Number of employees Requirements Print Hotel Restaurant Casino 75.000 15,000 60,000 160 200 Done 40 1. Calculate division margins in percentage terms prior to allocating fixed overhead costs 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, in dollars and as a percentage of revenues 3. Discuss the results. How would you decide how to allocate indirect costs to the divisions? Why?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 36P: Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two...

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