# Use the direct method to allocate support costs to each of the two principal operating departments, Engineering and Computer Sciences.

First, calculate each base’s allocation rate to determine how support costs will be allocated using direct methods. The allocation rate for F&T maintenance is \$350,000 / 7,000 (total hours) = \$50 per hour. Enrollment Services: The allocation rate is \$950,000/60,000 (total credit hours = \$15.83 an hour).

These rates can be used to assign support costs to the departments as follows:

Department | F&T Maintenance (hours) | F&T Maintenance Cost | Enrollment Services (credit hrs) | Enrollment Services Cost Engineering | 2,000 | 2,000 * \$50 = \$100,000 | 24,000 | 24,000 * \$15.83 = \$380,320 Computer Sciences | 5,000 | 5,000 * \$50 = \$250,000 | 36,000 | 36,000 * \$15.83 = \$571,880

Schedule:

Support costs allocated to Engineering Department: \$100,000 (F&T Maintenance) + \$380,320 (Enrollment Services) = \$480,320 Support costs allocated to Computer Sciences Department: \$250,000 (F&T Maintenance) + \$571,880 (Enrollment Services) = \$821,880

Support costs for Engineering Department are \$480,320 while those allocated to Computer Sciences Department are \$821,880.

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