124) There are three Easy Stay Inns, one in each of the following cities: Britton, Casey, and Sloop.
The central office provides computer services to each of the three motels. Information pertaining to the computer centre and the three motels follows.
Budgeted fixed costs$150,000- – –
Budgeted variable rate
per hour$ 25- – –
Normal usage in hours- 1,0001,200300
Actual fixed costs$160,000- – –
Actual variable costs$ 70,000- – –
Actual usage in hours- 8001,400400
a. Using the direct method, allocate the computer centre costs to each motel location to provide information for setting room rates.
b. Using the direct method, allocate the computer centre costs to each motel location assuming the purpose is to evaluate performance.
c. Did the total amount allocated in requirement (B) above differ from the amount of costs incurred by the computer centre?