Question
1.A college's School of Liberal Arts has three departments. Estimated information for the next year is presented in the self-checking spreadsheet and the essential information
1.A college's School of Liberal Arts has three departments. Estimated information for the next year is presented in the self-checking spreadsheet and the essential information is posted below:
Science History English
Number of Students per Year 1,400 800 400
Number of Classes per Semester 70 40 30
Number of Professor 20 24 10
Revenues $30,000,000 $17,000,000 $9,000,000
Direct expenses 25,000,000 14,000,000 7,000,000
a.Does the allocation of equal amounts of indirect cost provide a "fair" allocation? Answer yes or no and explain your reasoning.
b.Which cost driver best serves the interests of the Science department? Which cost driver best serves the interests of the History department? Which cost driver best serves the interests of the English department?
c.What cost driver(s) would you suggest that the school use to assign a "fair" portion of overhead costs to each department?
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