Return to the direct method of cost allocation and use the same cost

drivers as specified in Problem 6.4 for the general administration

and facilities departments. However, assume that $2,000,000 of

financial services costs is related to billing and managerial reporting

and $1,000,000 is related to payroll and personnel management

activities.

a. Devise and implement a cost allocation scheme that recognizes

that the financial services department has two widely different

functions.

b. Is there any additional information that would be useful in

completing Part a of this problem?

c. What are the costs and benefits to St. Benedicts of creating two

cost pools for the allocation of financial services costs?