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: What is the cost allocation if fixed computer costs of $7 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?
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: What is the cost allocation if fixed computer costs of $7 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
What is the cost allocation if fixed computer costs of $7 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? (Enter your answers in dollars, not in millions. Do not round intermediate calculations.)
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