Exercise 12-40 (Algo) Single versus Dual Rates (LO 12-5, 6)
Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) and
Commercial Support (CS). Corporate information technology (IT) services support both groups. The cost of computer support is $48
million. The following Information is given:
Utilization Revenues ($000)
Governmental Services
Commercial Support
42%
58
$ 242,820
441,180
Required:
What is the cost allocation if fixed IT costs of $37.4 million are allocated on the basis of utilization and the remaining costs (all variable)
are allocated on the basis of group revenues?
Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
Fixed
Variable
Total
Governmental
Services
Commercial
Support
$
0
$
0