3) Gotham University offers only high-tech graduate-level programs. Gotham has t

Question

3) Gotham University offers only high-tech graduate-level programs. Gotham has two 3) principal operating departments, Engineering and Computer 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 $350,000, while the Enrollment Services budget is $950,000. The following chart summarizes budgeted amounts and allocation-base amounts used by each department: Services Provided: (Annually) F&T; Enrollment Computer Budget Engineering Sciences Maintenance Service Engineering $3,500,000 Computer $1,400,000 Sciences F&T; Maintenance $350,000 (in hours) Enrollment Service (in credit hrs) 2,000 1,000 Zero 5,000 $950,00024,000 36,000 2,000 Zero Required: a. Set up algebraic equations in linear equation form for each activity b. Determine total costs for each department by solving the equations from part (a) using the reciprocal method. CS; Facility and Technical Maintenance- (Engineering- Eng: Computer Sciences FTM; Enrollment Service = ES)

Explanation / Answer

a). Algebric Equations are:

Eng= 350000+ FTM*2000/8000 + ES * 24000/62000
      = 350000 + 2/8 FTM + 24/62 ES

CS = 1400000+ 1/8 FTM + 36/62 ES

FTM = 350000+ 2/62 ES

ES = 950000+ 5/8 FTM

b). Put value of FTM in ES equation
ES = 950000 + 5/8 (350000+ 2/62 ES)
ES = 950000+ 0.625(350000+ 0.032 ES)
ES = 950000 + 218750 + 0.02 ES
ES = 1192602.04 or 1192602 approx

FTM = 350000+ 2/62 (1192602)
FTM = 388471

Eng = 350000+ 2/8 (388471) + 24/62 (1192602)
Eng = 908770

CS = 1400000 + 1/8(388471) + 36/62(1192602)
CS = 2141037

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