Question 2 (of 7) 1 - 0 Save & Exit Submit value: 10.00 points A consulting firm

Question

Question 2 (of 7) 1 - 0 Save & Exit Submit value: 10.00 points A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $12.12 million. The following information is given: Gigabytes of Storage 88,300 45,400 Number of Consultants 125 150 Corporate Government Required: What is the cost allocation if fixed computer costs of $7.89 million are allocated on the basis of number of consultants and the remaining costs (all variable) are allogated on the basis of the number of gigabytes of storage used by the department? (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Corporate Government Fixed Variable Total

Explanation / Answer

Fixed costs

= $7.89 million

Variable costs

= Total costs – Fixed costs

= $12.12 million - $7.89 million

= $4.23 million

Total number of consultants

= 125 + 150

= 275

Total Gigabytes of storage

= 88,300 + 45,400

= 133,700

The following table shows the calculations

Calculations A B C = A + B D E = D / C F = A x E G = B x E Particulars Corporate Govemment Total Cost allocated Cost per unit Allocated to Corporate Allocated to Govemment Number of consultants 125 150 275 7890000 28690.90909      3,586,365          4,303,635 Gigabytes of storage 88300 45400 133700 4230000 31.63799551      2,793,635          1,436,365 Total      6,380,000          5,740,000

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