Question
In: Accounting
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 $13.11 million. The following information is given:
| Gigabytes of Storage | Number of Consultants | |||||
| Corporate | 92,200 | 135 | ||||
| Government | 64,000 | 160 | ||||
Required:
What is the cost allocation if fixed computer costs of $9.90 million are allocated on the basis of number of consultants and the remaining costs (all variable) are allocated on the basis of the number of gigabytes of storage used by the department? (Do not round intermediate calculations. Enter your answers in thousands of dollars.)
| Corporate | Government | |
| Fixed | ||
| Variable | ||
| Total |
Solutions
Expert Solution
Answer:
Allocation of Cost of
Computer Support – Fixed Cost:
Cost allocated to Corporate Department = $9,900,000 * 135 / (135 +
160)
Cost allocated to Corporate Department = $9,900,000 * 135 /
295
Cost allocated to Corporate Department =
$4,530,508
Cost allocated to Government Department = $9,900,000 * 160 /
(135 + 160)
Cost allocated to Government Department = $9,900,000 * 160 /
295
Cost allocated to Government Department =
$5,369,492
Total Cost of Computer Support = $13,110,000
Total Fixed Computer Cost = $9,900,000
Total Variable Computer Cost = $13,110,000 - $9,900,000
Total Variable Computer Cost = $3,210,000
Allocation of
Variable Cost of Computer Support:
Cost allocated to Corporate Department = $3,210,000 * 92,200 /
(92,200 + 64,000)
Cost allocated to Corporate Department = $3,210,00 * 92,200 /
156,200
Cost allocated to Corporate Department =
$1,894,763
Cost allocated to Government Department = $3,210,000 * 64,000 /
(92,200 + 64,000)
Cost allocated to Government Department = $3,210,00 * 64,000 /
156,200
Cost allocated to Government Department =
$1,315,237
|
Corporate |
Government |
|
|
Fixed |
4,530,508 |
5,369,492 |
|
Variable |
1,894,763 |
1,315,237 |
|
Total |
6,425,272 |
6,684,728 |
ekkarill92 answered 1 year agoRelated Solutions
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