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Do Assignment Exercise 7-1, Allocating Indirect Costs found at the bottom of page 532, do only Required #1.

Table 7-2 can be found on Page 57. In your eBook or access it in the section Examples & Exercises,

Chapter 7, Assignment Exercise 7-1, do only "Required #1

Please recall that when using Excel you must use formulas to calculate the required answers. You are not permitted to do manual calculations and simply insert a number into a cell.Bottom of Form

Assignment Exercise 71: Allocating Indirect Costs

Study Table 71, Table 72, and review the chapter text describing how the indirect cost is allocated. This assignment will change the allocation bases input for (A) Number of Visits (Volume), (B) Proportion of Direct Costs, and (C) Number of Computers in Service.

Required

1. Compute the costs allocated to cost centers Clerical Salaries, Administrative Salaries, and Computer Services using the new allocation bases shown below. Use worksheet #1 that replicates the set up in Table 72. Total the new results.

The new allocation bases are:

1. • A = # Visits (Volume): PT = 9,600; OT = 4,000; ST = 2,400; Total = 16,000(16,000 x $3.50 = $56,000)
   • B = Proportion of Direct Costs: PT = 60%; OT = 25%; ST = 15%; Total = 100%(% 3 $55,000 total)
   • C = # Computers in Service: PT = 10; OT 5 ; ST = 3; Total = 16 (16 $5,000 each = $80,000)
2. Using worksheet #2 that replicates the set up in Table 71, enter the new direct cost and the new totals for indirect costs resulting from your work. Total the new results.