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.