Unformatted text preview: to before 225 x 180 = 40,500 265 x 180 = 47,600 225 x 120 = 27,000 265 x 60 = 15,900 225 x 100 = 22,500 265 x 100 = 26,500 90,000 90,000 Wharton and SAS are getting screwed bc they didnt change any thing yet they are being allocated a higher
cost -----> therefore we use budgeted Allocate budgeted fixed costs based on budgeted use: c) Are There Other Ways to Allocate Common Fixed Costs?
Recall that a common cost is a cost shared among two or more
departments/ cost centers. fixed 1) The Incremental Cost Allocation Method Wharton bears some of the cost for HUP because it doesn't use all the service
supplied. You can only absorb the cost of a service ranked lower than you, so it is
better to be lower down This method is the least accurate bc it has no dependance on what ﬁxed costs each dept needs -- it only
cares about fucking over the rich (it is asked on old midterms wh is worst method so pick ability-to-bear) 2) The Ability-to-Bear Method: 200 / 300 x 90k = 60k 70/300 x 90k = 21k 30/300 x 90k = 9k 3) The Stand-alone Method: Stand-Alone 38/95 x 90k = 36k 34.5/95 x 90k = 32,684 22.5/95 x 90k = 21,316 Assume numbers cha...
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- Winter '14