Exercise 12-35 Single versus Dual Rates: Ethical Considerations (LO 12-6, 7) A c

Question

Exercise 12-35 Single versus Dual Rates: Ethical Considerations (LO 12-6, 7) A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $3 million. The following information is given: Gigabytes of Storage 75,000 50,000 Number of Consultants 150 215 Corporate Government Required a. What is the cost charged to each department if the allocation is based on the number of gigabytes of storage? (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Cost Allocation Corporate Government

Explanation / Answer

a) Cost allocation on the basis of number of gigabytes :

b) Cost allocation on the basis of number of consultants :

c) No, this affect the choice of the allocation basis

Cost allocation Corporate (3000000*75000/125000) 1800000 Government (3000000*50000/125000) 1200000

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