Enterprise SystemsInstructions: Answer the following question using class PPTs.Question 1 (5 pts):Suppose Fitter Snacker...

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Do a cost allocation for the different departments

April 14, 2018

Enterprise Systems
Instructions: Answer the following question using class PPTs.
Question 1 (5 pts):
Suppose Fitter Snacker pays $20,000 for rent every month.
a. Do a cost allocation for the different departments of Fitter Snacker using information in
Figure 1. Show your calculation.
b. Which department pay the most for rent, and which department pay the least for rent?
Where does the difference come from?
c. What type of cost allocation did you do for this question?
Cost center
A010
A020
A030
A040
A050
A060

Department

Square footage

Finance
H/R
Sales
Marketing
Purchasing
Administration

480
520
200
590
310
400

Figure 1: Cost Centers for Fitter Snacker

Question 2 (5 pts):
Suppose Fitter Snacker pays $12,000 for utilities every month. They have 6 different cost centers
(Figure 1).
a. If Fitter Snacker allocates the cost equally to each cost center, how much does each
department pay for utilities each month?
b. If Fitter Snacker allocates 20% of the cost to the Administration department and equally
allocates the rest of the cost to other cost centers, how much does each department pay for
utilities each month?
c. What type of cost allocation did you do for this question?










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