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| Weber Condos Corporation is a small company owned by James Ortiz. It leases three condos of differing sizes to customers as vacation facilities. Labor costs for each condo consist of maid service and maintenance cost. Other direct operating costs consist of interest and depreciation. The direct operating costs for each condo follow. |
| Other Direct | ||||||
| Direct Labor | Operating Costs | |||||
| Condo 1 | $ | 17,400 | $ | 43,800 | ||
| Condo 2 | 18,200 | 43,000 | ||||
| Condo 3 | 30,500 | 60,000 | ||||
| Total | $ | 66,100 | $ | 146,800 | ||
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Question & Answer: Weber Condos Corporation is a small company owned by James Ortiz. It leases three condos of differing sizes to customers as va…..
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| Indirect operating expenses, which amounted to $36,700, are allocated to the condos in proportion to the amount of other direct operating costs incurred for each. |
| Required: |
| a. | Assuming that the amount of rent revenue from Condo 2 is $112,000, what amount of income did it earn? (Do not round intermediate calculations.) |
Expert Answer
Rent revenue from condo 2 : $112,000
Expenses for condo-2:
Direct labour : 18200
Direct operating cost : 43000
Indirect operating cost : 36700*43000/146800 = 10750
Total expenses(18200+43000+10750) = 71950
Income earned from condo 2 : 112000-71950
=$40,050
