Question

Bay State Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’ output for the year is as follows:

	Provider of Service
User of Service	Library			Computing Services
Library		—			10	%
Computing Services		—			—
Liberal Arts		80	%		20	%
Sciences		20	%		70	%

The budgeted costs in the two service departments for the year are as follows:

Library	$	730,000
Computing Services		360,000

Required:

1.	Use the direct method to allocate the budgeted costs of the Library and Computing Services Department to the college’s Liberal Arts and Sciences departments. (Do not round intermediate calculations.)
	Provider of Service Liberal Arts Sciences Library Computing Total $0 $0

       

Answer 1

Library	730000
Computing Services	360000
Departments	Library	Computing Services	Liberal Arts	Sciences
Library	-	-	80%	20%
Computing Services	10%	-	20%	70%
Departments	Liberal Arts	Sciences	Library	Computing Services
Library	80%	20%	-	-
Computing Services	20%	70%	10%	-
Departments	Sum of Percentage	Liberal Arts	Sciences
Library	80+20=100	80/100	20/100
Computing Services	20+70=90	20/90	70/90
Departments	Liberal Arts	Sciences	Library	Computing Services
Allocated Overheads	0	0	730000	360000
Dept Library Reallocation	584000	146000	-730000
Dept C. Services Reallocation	80000	280000		-360000
Total	664000	426000