There Are Three Easy Stay Inns, One in Each of the Following

question 29

Essay

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. 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?

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Definitions:

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing to buy at different price points.

Profit-Maximizing

A strategy where businesses aim to achieve the highest possible profit given their resources, market conditions, and constraints.

Output Level

Refers to the total quantity of goods or services produced by an entity in a given period.

Economic Profit

The difference between a firm's total revenue and all costs, including both explicit and opportunity costs, indicating the overall profitability beyond the financial gain.