A consulting firm has two departments, Corporate and Government. Computer suppor

Question

A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $3.44 million. The following information is given.....

What is the cost allocation if fixed computer costs of $2.40 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? (Do not round intermediate calculations. Round final answers to the nearest dollar amounts.)

Giagbytes of Storage Number of Consultants Corporate 40,200 170 Gov't 21,000 98

Explanation / Answer

Giagbytes of storage Number of consultants Corporate 40200 170 Govt 21000 98 Total 61200 268 Corporate Govt Total Fixed 1522388 877612 2400000 Variable 683137 356863 1040000 Total 2205525 1234475 3440000 Basis of allocation Fixed 2.4*170/268 2.4*98/268 (number of consultants) Variable (3.44-2.4) 1.04*40200/61200 1.04*21000/61200

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