Fixed cost allocation. State University completed construction of its newest administrative building at the end of 2011. The University's first employees moved into the building on January 1, 2012. The building consists of office space, common meeting rooms (including a conference center), a cafeteria and even a workout room for its exercise enthusiasts. The total 2012 building space of 125,000 square feet was utilized as follows:

Usage of Space % of Total Building Space

Office space (occupied)..........52%

Vacant office space............8%

Common meeting space.........25%

Workout room.............5%

Cafeteria..............10%

The new building cost the university $30 million and was depreciated using the straight-line method over 20 years. At the end of 2012 three departments occupied the building: executive offices of the president, accounting, and human resources. Each department's usage of its assigned space was as follows:

Required1. How much of the total building cost will be allocated in 2012 to each of the departments, if allocated on the basis of the following?a. Actual usageb. Planned usagec. Practical capacity2. Assume that State University allocates the total annual building cost in the following manner:a. All vacant office space is absorbed by the university and is not allocated to the departments.b. All occupied office space costs are allocated on the basis of actual square footage used.c. All common costs are allocated on the basis of a department's practical capacity.Calculate the cost allocated to each department in 2012 under this plan. Do you think the allocation method used here is appropriate?Explain.

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Actual Office Space Used (sq. ft) Practical Capacity Office Space (sq. ft.) Planned Office Space Used (sq. ft.) Department Executive Accounting Human resources 16,250 26,000 22,750 12,400 26,040 23,560 18,000 33,000 24,000