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Clic Seattle Western University has provided the following data to be used in its service department cost allocations: Servic

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Answer #1

Administration cost = $2,400,000

Total student credit hours = 25,000

Student credit hours used by undergraduate programs = 20,000

Student credit hours used by graduate programs = 5,000

Administration cost allocation to undergraduate programs = Administration cost x Student credit hours used by undergraduate programs/Total student credit hours

= 2,400,000 x 20,000/25,000

= $1,920,000

Administration cost allocation to graduate programs = Administration cost x Student credit hours used by graduate programs / Total student credit hours

= 2,400,000 x 5,000/25,000

= $480,000

Facility service cost = $1,600,000

Space occupied by undergraduates programs = 70,000 square feet

Space occupied by graduates programs = 30,000 square feet

Total space = 100,000 square feet

Facility service cost allocated to undergraduate programs = Facility service cost x Space occupied by undergraduates programs/Total space

= 1,600,000 x 70,000/100,000

= $1,120,000

Facility service cost allocated to graduate programs = Facility service cost x Space occupied by graduates programs/Total space

= 1,600,000 x 30,000/100,000

= $480,000

Service Departments Operating Departments
Administration Facility Services Undergraduate Programs Graduate Programs Total
Departmental costs before allocations 2,400,000 1,600,000 26,800,000 5,700,000 36,500,000
Allocations:
Administration costs -2,400,000 1,920,000 480,000
Facility services costs -1,600,000 1,120,000 480,000
Total costs after allocation 0 0 $29,840,000 $6,660,000 $36,500,000

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