Revenues Operating Expenses Income before Service Charges Investment ROI before service charges Number of professors Number of students in program Service department expenses Service department charge rate Revenues Operating expenses Income before service charges Service charges: Payroll Advising Income from operations ROI after service charges Instructional Instructional Accounting Business 500,000 $1,000,000 250,000 $ 550,000 FORMULA 2 FORMULA 1 300,000 $ 500,000 FORMULA 3 $ $ $ 5 200 Payroll (Driver is # of professors) 100,000 FORMULA 5 Instructional Accounting FORMULA 7 FORMULA 9 FORMULA 11 FORMULA 4 FORMULA 13 10 500 Advising (Driver is # of students) $ 200,000 FORMULA 6 500,000 $1,000,000 250,000 $ 550,000 250,000 $ 450,000 Instructional Business FORMULA 8 FORMULA 10 FORMULA 12 FORMULA 14

Revenues Operating Expenses Income before Service Charges Investment ROI before service charges Number of professors Number of students in program Service department expenses Service department charge rate Revenues Operating expenses Income before service charges Service charges: Payroll Advising Income from operations ROI after service charges Instructional Instructional Accounting Business 500,000 $1,000,000 250,000 $ 550,000 FORMULA 2 FORMULA 1 300,000 $ 500,000 FORMULA 3 $ $ $ 5 200 Payroll (Driver is # of professors) 100,000 FORMULA 5 Instructional Accounting FORMULA 7 FORMULA 9 FORMULA 11 FORMULA 4 FORMULA 13 10 500 Advising (Driver is # of students) $ 200,000 FORMULA 6 500,000 $1,000,000 250,000 $ 550,000 250,000 $ 450,000 Instructional Business FORMULA 8 FORMULA 10 FORMULA 12 FORMULA 14

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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