WileyPlus Problem 86 There are three Eldorado Motels one in

WileyPlus Problem 8-6 There are three Eldorado Motels, one in each of the following cities: Braithwaite, Crowder, and Lisgar. The central office provides computer services to each of the three motels. Information pertaining to the computer centre and the three motels follows. Computer Centre Braithwaite Crowder Lisgar Budgeted fixed costs Budgeted variable rate per hour Normal usage in hours Actual fixed costs Actual variable costs Actual usage in hours $155,000 $24 1,020 1,220 260 $167,000 $67,500 830 1,390 380 Using the direct method, allocate the computer centre costs to each motel location to provide information for setting room rates Allocation of computer centre costs Braithwaite Crowder Lisgar

Solution

Solution:

Budgeted Total Hours = 1020 +1220+ 260 = 2500 hours

Budgeted Fixed cost = $155,000

Predetermined rate per hour for allocation = variable rate per hour + (Budgeted Fixed cost / Budgeted hours)

= $24 + ($155000 / 2500) = $24 +$62 = $86

Allocation of Computer center Costs (Predetermined Rate Per Hour *Actual hours)
Braithwaite ($86*830)	$71,380.00
Crowder ($86*1390)	$119,540.00
Lisgar ($86*380)	$32,680.00