Chapter 12, Problem 31E

Lackawanna Community College has three divisions: Liberal Arts, Sciences, and Business Administration. The college’s comptroller is trying to decide how to allocate the costs of the Admissions Department, the Registrar’s Department, and the Computer Services Department. The comptroller has compiled the following data for the year just ended.

Required:

1. 1. For each department, choose an allocation base and distribute the departmental costs to the college’s three divisions. Justify your choice of an allocation base.
2. 2. Would you have preferred a different allocation base than those available using the data compiled by the comptroller? Why?
3. 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: the costs incurred by the departments were $120,000, $160,000, and $360,000, for Admissions, Registrar, and Computer Services, respectively.