Question

Chilton Day School allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools. Last year the allocations (000s omitted) were as follows:

	Preschool			Middle School			High School			Total
Tuition revenue	$	1,670		$	1,970		$	2,370		$	6,010
Marketing and administration		360			410			485			1,255

In the current year, the middle and high schools experienced no change in revenues, but the preschool’s tuition revenue increased to $2.07 million. Marketing and administrative costs rose to $1,420,000.

Required:

1. Using revenue as an allocation base, how should the costs be allocated for the current year? (Do not round intermediate calculations. Enter your dollar answers in thousands rounded to 2 decimal places.)

Answer 1

Allocation of costs based on revenue for the current year
	Preschool	Middle School	High School	Total
Tuition Revenue (current year)	2070	1970	2370	6410
Ration of tutition revenue (Each School revenue/Total Revenue)	0.3229	0.3073	0.3697
Total Marketing and administration cost (1420+410+485)	2315
Allocation of cost based on ration of revenue (2315*ratio of each school)	747.59	711.47	855.94