Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The cost of computer support is $13.27 million.
Gigabytes of Storage - Number of Consultants:
Corporate 98,200 145
Government 60,000 175
Fixed computer costs of $7.43 million are allocated based on the number of consultants.
Variable costs are allocated based on the number of gigabytes of storage used by the department.
First, we need to determine the estimated overhead allocation rate for each type of cost (fixed and variable).
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
<u>Fixed costs:</u>
Estimated manufacturing overhead rate= 7,430,000/(145 + 175)= $23,218.75 per consultant.
<u>Variable cost:</u>
Estimated manufacturing overhead rate= (13,270,000 - 7,430,000)/ (98,200 + 60,000)= $36.91 per gygabyte
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
<u>Corporate:</u>
Allocated MOH= 23,128.75* 145 + 36.91*98,200= $6,978,230.75
<u>Government:</u>
Allocated MOH= 23,128.75*175 + 36.91*60,000= $6,262,131.25
