Referring to the same problem as above, the County departments will utilize a to

Question

Referring to the same problem as above, the County departments will utilize a total of 30,000 hours of service time, broken down according to the table below. How does the IT Department bill the $3,000,000 to each department (i.e. How much should each department be billed in order to cover the $3,000,000 IT costs?) (Again, format your answer in dollar amounts only. Do not use the dollar sign ($) or any commas.)

Department Hours of processing time used

Finance 12,000

Water 6,000

Police 2,000

Planning 10,000

TOTAL 30,000 Total amount to be billed$3,000,000

Explanation / Answer

Billing for each service hour

= Budgeted Activity / Budgeted hours of service

= $3,000,000 / 30,000

= $ 100 per hour

Calculations A B C = A x B Department Hours used Allocation rate Cost allocated Finance          12,000 100           1,200,000 Water             6,000 100              600,000 Police             2,000 100              200,000 Planning          10,000 100           1,000,000          30,000           3,000,000

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