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Woodland Hotels Inc


Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted) were as follows:


   Front office personnel (desk, clerks, etc.)$11,200Administrative and executive salaries 5,400Interest on resort purchase 4,400Advertising 600Housekeeping 3,400Depreciation on reservations computer 80Room maintenance 1,120Carpet-cleaning contract 50Contract to repaint rooms 540 $26,790


 Pine ValleyOak GlenMimosaBirch GlenTotalRevenue (000s)$8,550$12,775$14,150$10,465$45,940Square feet 62,735 86,610 47,235 94,585 291,165Rooms 86 122 66 174 448Assets (000s)$104,430$154,620$81,815$65,005$405,870



1. Based on annual revenue, what amount of the central office costs are allocated to each resort?

2. Suppose that the current methods were replaced with a system of four separate cost pools with costs collected in the four pools allocated on the basis of revenues, assets invested in each resort, square footage, and number of rooms, respectively. Which costs should be collected in each of the four pools?

3. Using the cost pool system in requirement 2, how much of the central office costs would be allocated to each resort?

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