Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

WKU has the following two projects: X: Public Health about controlling COVID-19 spread. CDC Center for Disease Control) will reimburse WKU for the amount of

WKU has the following two projects:

X: Public Health about controlling COVID-19 spread. CDC Center for Disease Control) will reimburse WKU for the amount of 300% of the reported costs

incurred in the project.

Y: Developing cheap alternative to N95 mask. This developed method will be sold to any mask manufacturer.

For each project, WKU incurred both direct and indirect costs. Indirect costs are allocated using a base chosen by WKU. The following information is given:

WKU incurred a total of $4,000,000 indirect costs (utilities, supplies, assistant salaries, and others). Since these costs are indirect, they cannot be traced specifically to individual projects. Thus, the university allocates the indirect costs arbitrarily.

The following additional information is given:

Project

Direct costs

Materials used in dollars (M$)

Space used in square feet (SF)

Assistants time used in hours (AH)

Computer time used in hours (CH)

X

$5,000,000

$300,000

5,000

4,000

80,000

Y

$3,000,000

$200,000

5,000

6,000

20,000

To maximize its benefit, the university wants to use which one of the following (as its indirect cost allocation base)?

A.

AH

B.

CH

C.

SF

D.

M$

E.

Any. All allocation bases result in the same amount of benefit to the university.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Information Technology Auditing And Assurance

Authors: James A. Hall, Tommie Singleton

2nd Edition

0324191987, 978-0324191981

More Books

Students also viewed these Accounting questions