Problem 7-40 Departmental Cost Allocation; Not-for-Profit (LO 7-3, 7-5] The Fleming Foundation is a charitable organization founded by Gaylord Fleming and Sandy Fieming. Tne Piemings Intended for the charity to provide programs in health care for the eldeny, particulary those in poverty. The two main program aivisions of the foundation are mentai nealth for the eloeny and nousing for the eldeny. In adoltion to these programs, the Foundation also provides health care educational programs and has a signinicant fund-ralsing effort to neip the Foundation grow and accompilsh the goals of the founders. The Founcation is organized into two operating departments-education and program management. These departments are supported by two service departments-Information technology (IT) and acministration. To summarize, there are four departments (two service oepartments and two operating cepartments) and two programs (mental nealth and housing for the eldeny). The service department costs are allocated to the operating cepartments, and then the operating department costs are allocated to the programs. There are $520.000 of costs airectiy traceable to each of the four departments. An additional $46,500 of Inairect costs Is snared among the four departments-2430,000 of whicn is allocated to the cepartments based on labor nours and $16,500 of which is allocateo to the cepartments based on the number of personnel (nead count in the departments The cost labor hours. and nead count in these departments in the most recent year are as folows: oirect Gor Head Departents Infornat lon tachnology Adnistration Cost Count 10,000 2,000 2,000 Education 107,000 4,000 Progran anagenent 291,00 3520,000 2,000 IT serves education, administration, and program management 20N, 20%. and 60% of its time, respectively. Aaministration serves education, IT, and program management 40%, 10%. and 50% of its time, respectively. The costs of the two operating departments (education and program management) are aliocated to the two programs (mental health and housing) as follows: the costs in Education are allocated on the basis of iabor hours in the programs, while the costs in program management are allocated using the head count used in the two programs. The folowing table snows the labor hours and nead count consumption by the two programs Lter Count ntal health 1,000 Hsing Labor bours in education 2.000 ead count in progras anennt Required: Determine the costs alocated to the mental neath and nousing programs using the (a) airect metnod, (D) the step metnod (assuming that it goes frst), and (c) the reciprocal metnod. (Round percentage calculations to 4 decimal places (e.g. 33.3333N). Do not round Intermediate calculations. Round your final answer to nearest whole dollar amount.) Cosl Allosation Mental Heaitn Housing Total aDet Method DStap Mathhod Recipocal Method
Problem 7-40 Departmental Cost Allocation; Not-for-Profit (LO 7-3, 7-5] The Fleming Foundation is a charitable organization founded by Gaylord Fleming and Sandy Fieming. Tne Piemings Intended for the charity to provide programs in health care for the eldeny, particulary those in poverty. The two main program aivisions of the foundation are mentai nealth for the eloeny and nousing for the eldeny. In adoltion to these programs, the Foundation also provides health care educational programs and has a signinicant fund-ralsing effort to neip the Foundation grow and accompilsh the goals of the founders. The Founcation is organized into two operating departments-education and program management. These departments are supported by two service departments-Information technology (IT) and acministration. To summarize, there are four departments (two service oepartments and two operating cepartments) and two programs (mental nealth and housing for the eldeny). The service department costs are allocated to the operating cepartments, and then the operating department costs are allocated to the programs. There are $520.000 of costs airectiy traceable to each of the four departments. An additional $46,500 of Inairect costs Is snared among the four departments-2430,000 of whicn is allocated to the cepartments based on labor nours and $16,500 of which is allocateo to the cepartments based on the number of personnel (nead count in the departments The cost labor hours. and nead count in these departments in the most recent year are as folows: oirect Gor Head Departents Infornat lon tachnology Adnistration Cost Count 10,000 2,000 2,000 Education 107,000 4,000 Progran anagenent 291,00 3520,000 2,000 IT serves education, administration, and program management 20N, 20%. and 60% of its time, respectively. Aaministration serves education, IT, and program management 40%, 10%. and 50% of its time, respectively. The costs of the two operating departments (education and program management) are aliocated to the two programs (mental health and housing) as follows: the costs in Education are allocated on the basis of iabor hours in the programs, while the costs in program management are allocated using the head count used in the two programs. The folowing table snows the labor hours and nead count consumption by the two programs Lter Count ntal health 1,000 Hsing Labor bours in education 2.000 ead count in progras anennt Required: Determine the costs alocated to the mental neath and nousing programs using the (a) airect metnod, (D) the step metnod (assuming that it goes frst), and (c) the reciprocal metnod. (Round percentage calculations to 4 decimal places (e.g. 33.3333N). Do not round Intermediate calculations. Round your final answer to nearest whole dollar amount.) Cosl Allosation Mental Heaitn Housing Total aDet Method DStap Mathhod Recipocal Method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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