Exercise 12-39 (Algo) Alternative Allocation Bases-Ethical Considerations (LO 12-5) 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 $49 million. The following information is given: Governmental Services Commercial Support Utilization 41% 59 Revenues ($000) $ 244,240 443,760 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?

Exercise 12-39 (Algo) Alternative Allocation Bases-Ethical Considerations (LO 12-5) 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 $49 million. The following information is given: Governmental Services Commercial Support Utilization 41% 59 Revenues ($000) $ 244,240 443,760 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?

Pkg Acc Infor Systems MS VISIO CD

10th Edition

ISBN:9781133935940

Author:Ulric J. Gelinas

Publisher:Ulric J. Gelinas

Chapter17: Acquiring And Implementing Accounting Information Systems

Section: Chapter Questions

Problem 1SP

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