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A consulting firm has two departments, Corporate and Government. Computer support is common to both departments....

A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $6 million. The following information is given: Gigabytes of Storage Number of Consultants Corporate 85,000 180 Government 35,000 230

Required: a. What is the cost charged to each department if the allocation is based on the number of gigabytes of storage? (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

b. What is the cost charged to each department if number of consultants is the allocation basis? (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

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Expert Solution

if the allocation is divided based on the gigabyte stored then we need to divide the cost on total gigabyte used.

Department Gigabytes
Corporate                85,000
Government                35,000
Total Gigabyte              120,000
Cost of computer          6,000,000
Total Gigabyte 120000
Per Gigabyte cost 50
Corporate          4,250,000
Government          1,750,000

if we using the count of consultant then we need to segregate the cost within the total consultants

Department No of consultant
Corporate                            180
Government                            230
Total consultant                            410
Cost of computer                6,000,000
Total consultant 410
Per consultant cost                      14,634
Corporate                2,634,146
Government                3,365,854

ekkarill92 answered 2 hours ago
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