1. Ash County's organizational structure includes one county manager and three deputy county managers. Each of the deputies oversees a handful of departments and provides human resource support and information technology support to each of those departments. Table 5.3 shows the data for the deputy county manager overseeing the public works departments (trans- portation, facilities, solid waste, and stormwater control). Allocate the cost of the deputy's orga nization based on full-time equivalent employees (FTEs). (a) What is the pool? (b) What is the base? (c) How much should be allocated to each department? 2. In the scenario in assignment 1, the deputy county manager wants the cost allocation to be redone using expenditures as the base. What are the new cost allocations? 3. In the scenario in assignment 1, the deputy county TABLE 5.3 manager is still concerned with creating equity in the distri- Ash County: Deputy County Manager bution of the costs of the organization. Additional information of Public Works has been collected to increase the accuracy of the allocation. Expenditures FTES Each area under the supervision of the deputy county man- Deputy County Manager $ 250,000 2 ager has tracked the time it spent providing services to each Human Resources $ 800,000 of the departments during the most recent month, as shown Information Technology $ 3,525,000 in Table 5.4. Use this additional information to produce a Transportation $ 37,525,813 275 direct allocation for the deputy's organization. $ 28,451,254 150 Solid Waste $ 8,752,486 24 4. The deputy county manager asks you to create a sim- Stormwater Control $ 35,248,125 12 ple table showing the total cost allocation to each depart- ment using the three models you have developed. Prepare a one-page memo to the deputy county manager explaining the differences among the models, your recommended method, and why you recommend it. 9 Facilities 412 TABLE 5.4 Ash County: Deputy County Manager of Public Works, With Time-Tracking Information Time Tracking Information Expenditures FTES Deputy HR I T Deputy County Manager $ 250,000 2 Human Resources $800,000 9 Information Technology $ 3,525,000 32 Transportation $ 37,525,813 275 15% 35% 25% Facilities $ 28,451,254 150 15% 18% 30% Solid Waste $ 8,752,486 24 55% Stormwater Control $ 35,248,125 412 15% 45% 100% 100% 100% 5. Boomtown is preparing a cost anal- ysis of three departments: Parks, Fire, and Water. To comply with accuracy standards in allocating indirect costs, Boomtown will employ the step-down method of cost allocation. There are two indirect cost groups that are allo- cated: city administration and facilities. Costs for facilities are allocated first, and then costs for city administration are allocated. Using the data in Table 5.5, prepare the cost allocation using direct cost as the base and determine the full cost of the departments. 24%
