Question

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 $9 million. The following information is given:

Gigabytes of Storage Number of Consultants
Corporate 97,500 135
Government 52,500 165

Required:

a. What is the cost charged to each department if the allocation is based on the number of gigabytes of storage? (Enter your answers in thousands of dollars.)

b. What is the cost charged to each department if number of consultants is the allocation basis? (Enter your answers in thousands of dollars.)

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Answer #1
a
Cost Allocation
Corporate 5850 =9000/(97500+52500)*97500
Government 3150 =9000/(97500+52500)*52500
b
Cost Allocation
Corporate 4050 =9000/(135+165)*135
Government 4950 =9000/(135+165)*165
The amounts in whole dollars are:
a
Cost Allocation
Corporate 5850000
Government 3150000
b
Cost Allocation
Corporate 4050000
Government 4950000
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