4. Marshall University offers only high-tech graduate-level programs. Marshall h
ID: 2459324 • Letter: 4
Question
4.
Marshall University offers only high-tech graduate-level programs. Marshall has two principal operating departments, Commerce and Social Sciences, and two support departments, Facility and Technology Maintenance and Enrollment Services. The base used to allocate facility and technology maintenance is budgeted total maintenance hours. The base used to allocate enrollment services is number of credit hours for a department. The Facility and Technology Maintenance budget is $500,000, while the Enrollment Services budget is $900,000. The following chart summarizes budgeted amounts and allocation-base amounts used by each department:
Services Provided: (Annually)
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
F&T Maintenance
(in hours)
$500,000
3,000
6,000
Zero
5,000
Enrollment Service
(in credit hrs)
$900,000
25,000
35,000
2,000
Zero
Required:
Prepare a schedule which allocates service department costs using the step-down method with the sequence of allocation based on the highest-percentage support concept. Compute the total amount of support costs allocated to each of the two principal operating departments, Commerce and Social Sciences.
Services Provided: (Annually)
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
F&T Maintenance
(in hours)
$500,000
3,000
6,000
Zero
5,000
Enrollment Service
(in credit hrs)
$900,000
25,000
35,000
2,000
Zero
Explanation / Answer
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
Total
F&T Maintenance
$500,000
3,000
6,000
Zero
5,000
14,000
(in hours)
Enrollment Service
$900,000
25,000
35,000
2,000
Zero
62,000
(in credit hrs)
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
Total
F&T Maintenance
$500,000
21%
43%
0
36%
14,000
(in hours)
Enrollment Service
$900,000
40%
56%
3%
0
62,000
(in credit hrs)
Since F&T maintenance provide greater % of service to enrollment hence its cost will be allocated first.
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
F&T Maintenance
21%
43%
0%
36%
F&T Maintenance
5,00,000
1,07,143
2,14,286
-
1,78,571
Enrollment Service
42%
58%
0%
0%
Enrollment Service
10,78,571
4,49,405
6,29,167
-10,78,571
Total cost
5,56,548
8,43,452
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
Total
F&T Maintenance
$500,000
3,000
6,000
Zero
5,000
14,000
(in hours)
Enrollment Service
$900,000
25,000
35,000
2,000
Zero
62,000
(in credit hrs)
Budget
Commerce
Social Sciences
F&T Maintenance
Enrollment Service
Total
F&T Maintenance
$500,000
21%
43%
0
36%
14,000
(in hours)
Enrollment Service
$900,000
40%
56%
3%
0
62,000
(in credit hrs)
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