A College's School of Liberal Arts has 3 departments Estimated information for next year is presented below. Once table information is completed please provide the following information:

Does the allocation of equal amounts of indirect cost provide a "fair" allocation? Yes or No and explain

Which cost driver services the self-interest of the Science Department? History Department? English Department?

What cost driver(s) would you suggest that the school use to assign a "fair" portion of overhead costs to each department? Why?

INFORMATION:

Number of Students per year: Science = 1400, History = 800, English =400

Number of classes per semester: Science - 70, History = 40, English = 30

Number of professors: Science =20, History = 24, English = 10

Revenues: Science = $30,000,000, History = $17,000,000, English = $9,000,000

Direct Expenses: Science = $25,000,000 History = $14,000,000 English = $7,000,000

Each department keeps 20% of the profit it generates

Indirect costs are projected to be $5,000,000

Use a different table of the one below for each plan:

Plan 1: Allocate Equal Amounts of Indirect Costs to Each Department

Plan 2: Allocate Indirect Costs using # of Students as Cost Driver

Plan 3: Allocate Indirect Costs using # of classes/semester as cost driver

Plans 4: Allocate Indirect Costs using # of professors as cost driver

	Science	History	English
Revenues
Direct Exp
Indirect Exp
Net Inc
20% Net