Three Oaks Public Library has three areas, classified by type of books and services provided. The three areas are Technical, General, and Children. The library board of trustees is reviewing budget data and actual spending. Budget and actual direct costs of operating each area for the first quarter of 1997 are as follows:

Quarterly administrative overhead costs of operating the library were:

Other data with respect to library areas are:

Required:
1. Compare the actual results relative to budgeted direct costs.
2. Why would a cost analysis be important to the library board of trustees?
3. Discuss alternative ways of analyzing operating costs and services provided.
4. Would allocating the administrative overhead costs to the three areas be helpful
to your analysis? Comment.

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Technical General Children Budgeted direct costs $ 120,000 $ 70,000 $ 50,000 Total $ 240,000 Actual direct costs: Salaries $ 78,000 Books and periodicals Supplies... 47,700 2,900 $ 50,000 16,300 2,800 $ 43,000 $ 171,000 11,500 4,600 75,500 10,300 Total actual expenses $ 128,600 $ 69,100 $ 59,100 $ 256,800