Chilton Day School allocates marketing and administrative costs to its three schools based on total annual tuition
Question:
Chilton Day School allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools. Last year the allocations (000s omitted) were as follows:
Preschool Middle School High School Total Tuition
revenue $1,510 $1,810 $2,210 $5,530
Marketing and administration 280 330 405 $1,015
In the current year, the middle and high schools experienced no change in revenues, but the preschool's tuition revenue increased to $1.91 million. Marketing and administrative costs rose to $1,260,000.
Required:
1.Using revenue as an allocation base, how should the costs be allocated for the current year?
Pre-school Middle School High School
Admin. Costs:
Cost Management A Strategic Emphasis
ISBN: 9781259917028
8th Edition
Authors: Edward Blocher, David F. Stout, Paul Juras, Steven Smith