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 $47 million. The following information is given: Governmental Services Commercial Support Utilization Revenues ($000) $ 241,400 438,600 43% 57 Required: a. What is the cost charged to each group if the allocation is based on the utilization? b. What is the cost charged to each group if revenue is the allocation basis? c. Most of the business in Commercial Support is priced on a fixed fee basis, and most of the work in the Governmental Services Department is priced on a cost-plus fixed fee basis. Will the allocation base selected affect the amount of revenue?

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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 $47
million. The following information is given:
Governmental Services
Commercial Support
Utilization Revenues ($000)
$ 241,400
438,600
Required A
Required:
a. What is the cost charged to each group if the allocation is based on the utilization?
b. What is the cost charged to each group if revenue is the allocation basis?
c. Most of the business in Commercial Support is priced on a fixed fee basis, and most of the work in the Governmental Services
Department is priced on a cost-plus fixed fee basis. Will the allocation base selected affect the amount of revenue?
Complete this question by entering your answers in the tabs below.
Required B Required C
43%
Governmental services
Commercial Support
57
What is the cost charged to each group if the allocation is based on the utilization?
Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
Cost Allocation
< Required A
Required B >
Transcribed Image Text: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 $47 million. The following information is given: Governmental Services Commercial Support Utilization Revenues ($000) $ 241,400 438,600 Required A Required: a. What is the cost charged to each group if the allocation is based on the utilization? b. What is the cost charged to each group if revenue is the allocation basis? c. Most of the business in Commercial Support is priced on a fixed fee basis, and most of the work in the Governmental Services Department is priced on a cost-plus fixed fee basis. Will the allocation base selected affect the amount of revenue? Complete this question by entering your answers in the tabs below. Required B Required C 43% Governmental services Commercial Support 57 What is the cost charged to each group if the allocation is based on the utilization? Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands. Cost Allocation < Required A Required B >
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