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Sand and Sea Resorts Owns and Operates Two Resorts in a Coastal

question 12

Multiple Choice

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. $\begin{array}{ll}&\text { Harborview } & \text { Crystal Coast } & \text { Total }\\\text { Revenue }(000 \mathrm{~s}) & \$ 3,500 & \$ 6,500 & \$ 10,000\\\text { Square feet } & 75,000 & 225,000 & 300,000 \\\text { Rooms } & 60 & 140 & 200\\\text { Assets }(000 \mathrm{~s}) &\$ 100,000 & \$ 400,000 &\$ 500,000\end{array}$

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.
$\begin{array}{lr}\text { Cost Driver } & \text { Amount Allocated } \\\text { Revenue } & \$ 200,000\\\text { Square feet } & 100,000 \\\text { Rooms } & 600,000 \\\text { Assets }(000 \mathrm{~s}) & 3,100,000\end{array}$ What is the operating profit of the Crystal Coast Resort, using revenue as an allocation base?

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Transient Ischemic Attack

Often called a mini-stroke, a transient episode of neurological dysfunction caused by the loss of blood flow to the brain, spinal cord, or retina, without acute infarction.

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Electroencephalogram

A test that measures electrical activity in the brain using electrodes attached to the scalp, used to detect potential problems associated with this activity.

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