Direct Method
Ignatius College has provided the following data to be used in its service department cost allocations:
| Service Departments | Operating Departments | ||
| Administration | Physical Plant Services | Undergraduate Programs | Graduate Programs |
Departmental costs before allocations | $2,070,000 | $720,000 | $23,650,000 | $2,980,000 |
Student credit-hours |
|
| 40,000 | 5,000 |
Space occupied in square feet | 30.000 | 5,000 | 250.000 | 50.000 |
Required:
Using the direct method, allocate the costs of the service departments to the two operating departments. Allocate the costs of the Administration Department on the basis of student credit-hours and the costs of the Physical Plant Services Department on the basis of space occupied.
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