Question

During the planning process for the following year, the controller has estimated costs for the two units. Direct costs Direct contract hours worked Corporate Government Total $ 740,000 $ 2,960,000 $ 3,700,000 2,200 4,400 6,600 The controller expects indirect costs to total $8.1 million next year. Revenues from Corporate clients are expected to be $2.4 million. Required: a. Suppose Greenfield chooses to allocate indirect cost based on direct cost. 1. What cost would be allocated to the two units (Corporate and Government)? 2. What total revenue would they expect to collect next year? b. Suppose Greenfield chooses to allocate indirect cost based on direct contract hours worked. 1. What cost would be allocated to the two units (Corporate and Government)? 2. What total revenue would they expect to collect next year? Complete this question by entering your answers in the tabs below. Required A Required B 1. What cost would be allocated to the two units (Corporate and Government)? 2. What total revenue would they expect to collect next year? (Enter your answers in dollars and not in millions (i.e., 2.34 million should be entered as 2,340,000).) Corporate Government Total $ 201% % 1. Direct cost Percentage Allocation of indirect cost Percentage 01% 2. Direct cost Allocated indirect cost Total cost Fixed fee (Corporate) Fixed fee (Government) Total revenue

Answer 1

at The allication of the cost and revenue to 7 tuo units are calculated below @ Direct cast for corporate - $740,000 you $ 3700,000 = 20% B Direct cost for Government - $2960,000x100 $3700.000 -80% Gindirect cost based on direct cost Total indirect costa 81000oo. a indirect cost for corporate = 88100000 x 20% - =$1620000 ③ indireet cost for Government - $81000 ou X80% - $6480,000 Revenue from clients $2400000 Le parale) rotal Revenue E9 240,0000 $1200 0000 O. 2 Revenue from Goverment client = $12000OCOX 80% $960.2000

Direct cost percentage corporate Government tolal 740000 2,9 60000 3700 000 20% Sol. 1 oo. Allocation of percentage indirect cast 16200006480,000 8100000 2011 80 1007 स्व Alhet Cost 2360000 9440000 11 800,000 Fixed fee Bal) frotal revenue 40,000 160,000 200.000 2400000 960 000012000000 - 2 Direct Labor hours - 2200rcoo *100-33.337; 0222 for corporate 6600 700 6 preet labor hours = 440 x1oo- 66-678. for government 6600 indirect cost based on direct labor hours Total Indirect cost 8600000 indirect cost for corporate-88100000X 33.33% -$2700,000 indirect cost for goverment - $8100,000 X66.67% 2 Revenue from corporate clients $2400.000 a Total Revenue = $2400,000 0.3333?=$+20000 Revenue from Gox erment clients $ 7200 OOU x 0.66666 -$4800000

o pireet contract hours percentage corporate Government to tas 2200 4400 6600 33.337. 66.67% 100% Allocation of indirect cost 2700,000 5400000 8100000 percentare 33.33% 66.67% 100% loireet cost Indirect cost Total cost Fixed Fee Total Revenue 749000 29.600003709000 12700000 5400000 8100 000 3440,00083,60,000|11,800,000 10,400006-3560,000/-) 46 00000 1240000014800000 | 7200,000