Exercise 12-40 (Algo) Single versus Dual Rates (LO 12-5, 6) Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) an Commercial Support (CS). Corporate information technology (IT) services support both groups. The cost of computer support is $48 million. The following information is given: Governmental Services Commercial Support Utilization Revenues (5000) 42% $242,820 58 441,180

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Chapter1: Financial Statements And Business Decisions
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100%
Fixed
Variable
Total
$
Governmental
Services
0 $
Commercial
Support
0
Transcribed Image Text:Fixed Variable Total $ Governmental Services 0 $ Commercial Support 0
Exercise 12-40 (Algo) Single versus Dual Rates (LO 12-5, 6)
Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) and
Commercial Support (CS). Corporate information technology (IT) services support both groups. The cost of computer support is $48
million. The following information is given:
Governmental Services
Commercial Support
Utilization
42%
58
Revenues (5000)
$ 242,820
441,180
Required:
What is the cost allocation if fixed IT costs of $37.4 million are allocated on the basis of utilization and the remaining costs (all variable)
are allocated on the basis of group revenues?
Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
Transcribed Image Text:Exercise 12-40 (Algo) Single versus Dual Rates (LO 12-5, 6) Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) and Commercial Support (CS). Corporate information technology (IT) services support both groups. The cost of computer support is $48 million. The following information is given: Governmental Services Commercial Support Utilization 42% 58 Revenues (5000) $ 242,820 441,180 Required: What is the cost allocation if fixed IT costs of $37.4 million are allocated on the basis of utilization and the remaining costs (all variable) are allocated on the basis of group revenues? Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
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