Question

Rundle Condos Corporation is a small company owned by Dennis Hatch. 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.

	Direct Labor				Other Direct Operating Costs
Condo 1	$	16,600			$	37,800
Condo 2		18,200				51,000
Condo 3		30,250				66,500
Total	$	65,050			$	155,300

Indirect operating expenses, which amounted to $46,590, are allocated to the condos in proportion to the amount of other direct operating costs incurred for each.

Required

1. Assuming that the amount of rent revenue from Condo 2 is $105,000, what amount of income did it earn? (Do not round intermediate calculations.

Answer 1

1	Condo 2 earn $20,500
			Condo 1	Condo 2	Condo 3	Total
	Revenue	a	$                        -	$           105,000.00	$                             -	$           105,000.00
	Less: Expense
	Direct labour	b	$         16,600.00	$              18,200.00	$              30,250.00	$              65,050.00
	Other operating cost	c	$         37,800.00	$              51,000.00	$              66,500.00	$           155,300.00
	Indirect operating expense	d	$         11,340.00	$              15,300.00	$              19,950.00	$              46,590.00
				($46,590/155,300*51,000)
	Net Operating Income	e		£              20,500.00

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