Candula College has provided the following data to be used in its service depart
ID: 2479146 • Letter: C
Question
Candula College has provided the following data to be used in its service department cost allocations:
Service Departments
Operating Departments
Departmental costs before
Administration
Physical Plant Department
Undergraduate Programs
Graduate Programs
allocations
$1,500,000
$654,000
$32,650,000
$1,890,000
Student credit hours
40,000
10,000
Space occupied, in m²
2500
750
25000
5000
Using the direct method, allocate the costs of the service departments to the two operating departments. Allocate the costs of the Administration Department based on student credit hours and the costs of Physical Plant Services based on space occupied.
Service Departments
Operating Departments
Departmental costs before
Administration
Physical Plant Department
Undergraduate Programs
Graduate Programs
allocations
$1,500,000
$654,000
$32,650,000
$1,890,000
Student credit hours
40,000
10,000
Space occupied, in m²
2500
750
25000
5000
Explanation / Answer
Total Student Credit Hours 40000+1000 = 50000 Administration Cost $1,500,000 Undergraduate Programs 1500000*40000/50000 $1,200,000 Graduate Programs 1500000*10000/50000 $300,000 Total Space Occupied = 2500+750+25000+5000 = 33250 Undergraduate Programs 654000*25000/33250 $491,730 Graduate Programs 654000*5000/33250 $98,346
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