Three not-for-profit organizations operate separately in Sunland City. The most established entity, Sunland Support, has been around for over 100 years and generates by far the largest amount of donations. Sunland Kidz Zone was founded 30 years ago and generates less than half of what Sunland Support brings in. Sunland Emergency Aid was founded just 20 years ago and provides relief to those in the most urgent of circumstances. Sunland Emergency Aid is building its donation network and is already close to the level of Sunland Kidz Zone in terms of fundraising dollars. Until last year, all three entities operated separately-separate staff, separate spaces, and separate work plans. Then last year, discussions began to coordinate some of their administrative efforts for efficiency purposes, recognizing that each could benefit if they were willing to give up a bit of comfort. Each entity is paying the following amount annually to rent administrative space and cover the cost of staff. Sunland Support Sunland Kidz Zone $139,160 85,200 Sunland Emergency Aid 59,640 After some searching, they found a space that would accommodate everyone's needs, while making it possible to reduce administrative hours by 30%. The new, larger space plus administrative labor cost for all would be $203,400. (a) (b) Use the incremental method to allocate the new shared cost to each entity, ranking the entities by last year's fundraising results (the entity with the largest fundraising amount will be ranked first). New cost paid $ by each Sunland Support $ Sunland Kidz Zone Sunland Emergency Aid Total c $ $
Three not-for-profit organizations operate separately in Sunland City. The most established entity, Sunland Support, has been around for over 100 years and generates by far the largest amount of donations. Sunland Kidz Zone was founded 30 years ago and generates less than half of what Sunland Support brings in. Sunland Emergency Aid was founded just 20 years ago and provides relief to those in the most urgent of circumstances. Sunland Emergency Aid is building its donation network and is already close to the level of Sunland Kidz Zone in terms of fundraising dollars. Until last year, all three entities operated separately-separate staff, separate spaces, and separate work plans. Then last year, discussions began to coordinate some of their administrative efforts for efficiency purposes, recognizing that each could benefit if they were willing to give up a bit of comfort. Each entity is paying the following amount annually to rent administrative space and cover the cost of staff. Sunland Support Sunland Kidz Zone $139,160 85,200 Sunland Emergency Aid 59,640 After some searching, they found a space that would accommodate everyone's needs, while making it possible to reduce administrative hours by 30%. The new, larger space plus administrative labor cost for all would be $203,400. (a) (b) Use the incremental method to allocate the new shared cost to each entity, ranking the entities by last year's fundraising results (the entity with the largest fundraising amount will be ranked first). New cost paid $ by each Sunland Support $ Sunland Kidz Zone Sunland Emergency Aid Total c $ $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ksk.09
Transcribed Image Text:Three not-for-profit organizations operate separately in Sunland City. The most established entity, Sunland Support, has been around
for over 100 years and generates by far the largest amount of donations. Sunland Kidz Zone was founded 30 years ago and generates
less than half of what Sunland Support brings in. Sunland Emergency Aid was founded just 20 years ago and provides relief to those in
the most urgent of circumstances. Sunland Emergency Aid is building its donation network and is already close to the level of Sunland
Kidz Zone in terms of fundraising dollars.
Until last year, all three entities operated separately-separate staff, separate spaces, and separate work plans. Then last year,
discussions began to coordinate some of their administrative efforts for efficiency purposes, recognizing that each could benefit if
they were willing to give up a bit of comfort.
Each entity is paying the following amount annually to rent administrative space and cover the cost of staff.
Sunland Support
Sunland Kidz Zone
$139,160
85.200
Sunland Emergency Aid
59,640
After some searching, they found a space that would accommodate everyone's needs, while making it possible to reduce
administrative hours by 30%. The new, larger space plus administrative labor cost for all would be $203,400.
(a)
(b)
Use the incremental method to allocate the new shared cost to each entity, ranking the entities by last year's fundraising results
(the entity with the largest fundraising amount will be ranked first).
New
cost
paid
$
by
each
Sunland Support
$
Sunland Kidz Zone
Sunland Emergency Aid
Total c
$
$
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