HFA has two program departments, one for the treatment of ex$-$convicts who are drug users and the other for a job training program for ex$-$convicts. The treatment pro$-$gram hires $40\%$ of the program employees but accounts for approximately $63\%$ of expenses for both programs. HFA also has two support departments, one for general management $($administration$)$ and the other for fundraising. These are smaller depart$-$ments but they provide vital services. Initial allocation of the costs based on square footage notes the direct and indirect costs for each department, as shown in Table $4\mathrm{.}6.$ Using this information, calculate the full cost for the two program departments so that each program can be accurately reimbursed. It is HFA$’$s policy to allocate general management costs by the proportion of employees and to allocate fundraising costs by the proportion of program expenses using the direct distribution method.

Transcribed Image Text:

Table 4.6 HFA's Direct and Indirect Costs Administration Direct Costs Indirect Costs Total Costs $ 50,000 20,000 $ 70,000 Fundraising $ 100,000 30,000 Drug Treatment Job Training $ 500,000 100,000 $ 300,000 $ 130,000 $ 600,000 50,000 $ 350,000 Total $ 950,000 200,000 $ 1,150,000 Table 4.6 HFA's Direct and Indirect Costs Administration Direct Costs Indirect Costs Total Costs $ 50,000 20,000 $ 70,000 Fundraising $ 100,000 30,000 Drug Treatment Job Training $ 500,000 100,000 $ 300,000 $ 130,000 $ 600,000 50,000 $ 350,000 Total $ 950,000 200,000 $ 1,150,000

Answer rating: 100% (QA)

To calculate the full cost for the two program departments Drug Treatment and Job Training we need t... View the full answer