A college's School of Liberal Arts has 3 departments. Estimated information for next year is presented in the table below: Number of Students per Year Number of Classes per Semester Number of Professors Revenues Direct expenses Science 1,400 70 20 $30,000,000 25,000,000 History 800 40 24 $17,000,000 14,000,000 English 400 30 10 $9,000,000 7,000,000 Each department creates an Income Statement Departments are rewarded for being profitable - the college allows each department to "keep" 20% of the profit it generates to use as it desires. 20% Indirect Costs (for administrative salaries and office expesens, costs of the registrar's office, etc.) are projected to be: $5,000,000 Plan 1: Allocate Equal Amounts of Indirect Costs to Each Department Plan 2: Allocate Indirect Costs Using # of Students as Cost Driver Science History $30,000,000 $17,000,000 English $9,000,000 Science History $30,000,000 $17,000,000 English $9,000,000 Revenues Direct Exp Indirect Exp Net Inc. 20% Net Revenues Direct Exp Indirect Exp Net Inc. 20% Net Plan 3: Allocate Indirect Costs using # of Classes/semester as Cost Driver Science History Revenues $30,000,000 $17,000,000 Direct Exp Indirect Exp Net Inc. 20% Net English $9,000,000 English $9,000,000 Plan 4: Allocate Indirect Costs Using # of Professors as Cost Driver Science History Revenues $30,000,000 $17,000,000 Direct Exp Indirect Exp Net Inc. 20% Net 1. Does the allocation of equal amounts of indirect cost provide a "fair" allocation? Answer "Yes" or "No" and explain! Professor Basis Select one for each: Equal Amounts Student Basis Classes Basis 2. Which cost driver best serves the self-interest of the Science Department? Which cost driver best serves the self-interest of the History Department? Which cost driver best serves the self-interest of the English Department? 3. What cost driver(s) would you suggest that the school use to assign a "fair" portion of overhead costs to each department? The nubmer of sudents