Question

Lackawanna Community College has three divisions: Liberal Arts, Sciences, and Business Administration. The college's comptroller is trying to decide how to allocate the costs of the Admissions Department, the Registrar's Department, and the Computer Services Department. The comptroller has compiled the following data for the year just ended. Department Admissions Registrar Computer Services Annual Cost $127,000 215,000 456,000 Division Liberal Arts Sciences Business Administration Budgeted Budgeted Enrollment Credit Hours 2,000 40,000 1,300 35,500 1,200 29,500 Planned Courses Requiring Computer Work 22 34 33 Required: 1. Distribute the departmental costs to the college's three divisions based on the allocation base given. 2. Choose the better allocation base for distributing the cost to the following departments: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Distribute the departmental costs to the college's three divisions based on the allocation base given. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Division Businage Total Cost

Question 2

Answer 1

Answer 1. Lackawanna Community college case:

Part I. Cost allocation to departments based on allocation base given:

Division	Budgeted enrollment	Budgeted credit hours	Planned courses requiring Computer work
Liberal Arts	2,000	40,000	22
Sciences	1,300	35,500	34
Business Administration	1,200	29,500	33
Total	4,500	105,000	89

	Division
Department and allocation base	Liberal Arts	Sciences	Business Administration	Total cost allocated
Admissions (enrollment)	$56,444	$36,689	$33,867	$127,000
Registrar (credit hours)	$81,905	$72,690	$60,405	$215,000
Computer Services (courses requiring computer)	$112,719	$174,202	$169,079	$456,000

Working notes:

1. The allocation base for admissions cost is enrollment and total admissions cost to be allocated among the three departments is $127,000. Looking at enrollment, each department’s budgeted enrollment is given, totaling up to 4,500.

So, cost allocation = Total department cost * (Allocation base of the department/Total allocation base)

Admissions cost allocation to Liberal arts = $127,000 * (2,000/4,500) = $56,444 (rounded off)

Admissions cost allocation to Sciences = $127,000 * (1,300/4,500) = $33,867 (rounded off)

Admissions cost allocation to Business administration = $127,000 * (1,200/4,500) = $33,867 (rounded off)

2. The allocation base for Registrar cost is given as credit hours. Total credit hours from the first table above = 105,000 hours

Registrar cost allocation to Liberal arts = $215,000 * (40,000/105,000) = $81,905 (rounded off)

Registrar cost allocation to Sciences = $215,000 * (35,500/105,000) = $72,690 (rounded off)

Registrar cost allocation to Business administration = $215,000 * (29,500/105,000) = $60,405 (rounded off)

3. The allocation base for computer services is given as courses requiring computer. The total of this allocation base as per first table above = 89

Computer services cost allocation to Liberal arts = $456,000 * (22/89) = $112,719 (rounded off)

Computer services cost allocation to Sciences = $456,000 *(34/89) = $174,202 (rounded off)

Computer services cost allocation to Business administration = $456,000 *(33/89) = $169,079 (rounded off)

Part II.

Out of the allocation base options provided, the better allocation base for Registrar office cost can be budgeted enrollments because Registrar office work is directly proportion to number of students as it requires maintaining students’ records, making appointments, scheduling classes,etc. It would be better than existing allocation base which is credit hours.

For computer services cost, the better allocation base would be credit hours requiring computer work, since cost depends on time spent in the Computer lab.

Note: As HOMEWORKLIB answering guidelines, in case of multiple questions, first question to be answered completely. Request you to post Question 2 in a separate question.

Answer 2