Exercise 12-31 Cost Allocation in a College (LO 12-4)

Lackawanna Community College has three divisions: Liberal Arts, Sciences, and Business Administration. The college's comptroller is trying to decide how to allocate the costs of the Admissions Department, the Registrar's Department, and the Computer Services Department. The comptroller has compiled the following data for the year just ended.

DepartmentAnnual CostAdmissions$135,000Registrar231,000Computer Services488,000

DivisionBudgeted

EnrollmentBudgeted

Credit HoursPlanned Courses

Requiring

Computer WorkLiberal Arts2,80048,00030Sciences1,70041,50043Business Administration1,60035,50042

Required:

1.Distribute the departmental costs to the college's three divisions based on the allocation base given.

2.Choose the better allocation base for distributing the cost to the following departments: