Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 12, Problem 31E
Lackawanna Community College has three divisions: Liberal Arts, Sciences, and Business Administration. The college’s comptroller is trying to decide how to allocate the costs of the Admissions Department, the Registrar’s Department, and the Computer Services Department. The comptroller has compiled the following data for the year just ended.
Required:
- 1. For each department, choose an allocation base and distribute the departmental costs to the college’s three divisions. Justify your choice of an allocation base.
- 2. Would you have preferred a different allocation base than those available using the data compiled by the comptroller? Why?
- 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: the costs incurred by the departments were $120,000, $160,000, and $360,000, for Admissions, Registrar, and Computer Services, respectively.
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Gipps Business College (GBC) has two degree programs, undergraduate (UG) and graduate (GRAD) and three service departments, information technology (IT), Event Planning (EP), and Career Services (CS). The CFO of GBC is conducting a profitability analysis of the two programs and wants to include the appropriate costs of the service departments in the costs of the two degree programs. As a part of the analysis, the CFO has collected the following usage patterns of the ser vice departments over the last two years.
Using Departments
Suppying Department
IT
EP
CS
UG
GRAD
IT
0
10%
20%
40%
30%
EP
0
0
25%
25%
50%
CS
0
0
0
60%
40%
Direct Costs
$ 70,000.00
$ 90,000.00
$ 100,000.00
To be determined
Required:-
a.) The CFO is unsure what the best way to allocate the cost is and has asked you for the allocations to the UG and GRAD programs using:
The direct method;
The step method starting with IT, followed by EP,…
Lackawanna Community College has three divisions: Liberal Arts, Sciences, and
Business Administration. The college's comptroller is trying to decide how to
allocate the costs of the Admissions Department, the Registrar's Department,
and the Computer Services Department. The comptroller has compiled the
following data for the year just ended. Department Annual Cost Admissions $
118,000 Registrar 197,000 Computer Services 420, 000 Division Budgeted
Enrollment Budgeted Credit Hours Planned Courses Requiring Computer Work
Liberal Arts 1,100 31,000 12 Sciences 850 28,750 25 Business Administration
750 22,750 25 Required: 1. Distribute the departmental costs to the college's
three divisions based on the allocation base given. 2. Choose the better
allocation base for distributing the cost to the following departments:Recuired:
Dustroule the depurtmerital costs to the collegels three dwaish based on the
allocation bus ghen Chose the betier aliscation base for distr buting the cost to
the…
Burgess Business School has two degree programs, BBA and MBA. The school uses an ABC system to cost the three support services
it provides to students from both programs: Career Center, Events, and Library. Following are the costs of these three activities and the
cost drivers used in the system:
Activity
Cost
Activity
Career Center
Event planning and hosting.
Library
For the most recent year, data collected from the central IT systems indicate the following:
MBA
5,600
4,500
30,300
BBA
10,400
5,500
70,700
$ 448,000
440,000
606,000
Cost Driver
Interview-hours
Event attendance
Number of visits
Interview-hours
Event attendance
Library visits
Required:
a. Compute the cost-driver rates for the three activities at the school.
b. Suppose that in a future period, no students from the MBA program visited the Library. What amount of the Library cost would be
assigned to the MBA program?
Chapter 12 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 12 - Why is goal congruence important to an...Ch. 12 - Define and give examples of the following terms:...Ch. 12 - Prob. 3RQCh. 12 - Explain the relationship between performance...Ch. 12 - Prob. 5RQCh. 12 - What is the key feature of activity-based...Ch. 12 - Prob. 7RQCh. 12 - Define and give examples of the following terms:...Ch. 12 - Give an example of a common resource in an...Ch. 12 - Explain how and why cost allocation might be used...
Ch. 12 - Define the term cost allocation base. What would...Ch. 12 - Referring to Exhibit 125, why are marketing costs...Ch. 12 - Prob. 13RQCh. 12 - Why do some managers and accountants choose not to...Ch. 12 - Why is it important in responsibility accounting...Ch. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 21RQCh. 12 - Prob. 22RQCh. 12 - Prob. 23RQCh. 12 - Define the term manufacturing cycle efficiency.Ch. 12 - Prob. 25RQCh. 12 - What is meant by aggregate productivity, and what...Ch. 12 - For each of the following organizational subunits,...Ch. 12 - Prob. 28ECh. 12 - Prob. 29ECh. 12 - The following data pertain to the Waikiki Sands...Ch. 12 - Lackawanna Community College has three divisions:...Ch. 12 - Countywide Cable Services, Inc. is organized with...Ch. 12 - Prob. 36ECh. 12 - Prob. 37ECh. 12 - Prob. 38ECh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Rocky Mountain General Hospital serves three...Ch. 12 - Refer to the organization chart for Rocky Mountain...Ch. 12 - Prob. 44PCh. 12 - Buckeye Department Stores, Inc. operates a chain...Ch. 12 - Building Services, Co. (BSC) was started a number...Ch. 12 - Warriner Equipment Company, which is located in...Ch. 12 - Prob. 49PCh. 12 - MedTech, Inc. manufactures diagnostic testing...Ch. 12 - Prob. 51PCh. 12 - Cathys Classic Clothes is a retailer that sells to...Ch. 12 - Pacific Rim Industries is a diversified company...
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