Theta Services

Scenario: Allocate Costs

Data:

• Cost Pools and Allocation Bases:
  • Cost Pool 1 (Admin Costs): $120,000, Allocation Base: Number of Departments
  • Cost Pool 2 (IT Costs): $180,000, Allocation Base: Number of Employees

Requirements:

1. Allocate admin costs based on the number of departments.
2. Allocate IT costs based on the number of employees.
3. Compare the allocation methods and their impact on departmental budgets.
4. Discuss the advantages and disadvantages of using different allocation bases for cost allocation.
5. Recommend a suitable cost allocation method for Theta Services considering its cost structure.