BUS 320 Lecture Notes - Lecture 5: Direct Method (Education)

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 320
• Professor: Dennis Chung

Document Summary

Achieving the goals of the organization requires using scarce resources. Example b-1: step method 1 (allocate to water first) Water allocation steel: 60,000 * (1400/(1400+1600+1000)) = 21,000. Water allocation iron: 60,000 * (1600/(1400+1600+1000)) = 24,000. Water allocation electricity: 60,000 * (1000/(1400+1600+1000)) + 15,000. Electricity allocation steel: 95,000 * (2500/(2500+2500)) = 47,500. Example b-2: step method 2 (allocate to electricity first) Electricity allocation water: 80,000 * (2500/(2500+2500+2500)) = 26,667. Electricity allocation iron: 80,000 * (2500/(2500+2500+2500)) = 26,667. Electricity allocation steel: 80,000 * (2500/(2500+2500+2500)) = 26,667. Water allocation iron: 86,667 * (1400/(1600+1400)) = 46,222. 22. Water allocation steel: 86,667 * (1600/(1600+1400)) = 40,444. 44. If not stated, go with the department that provides more services. Departmental cost = direct costs + costs from other service departments (not internally) E = 80,000 + 0. 25 * (60,000 + 0. 33e) E = 80,000 + (0. 25 * 60,000) + (0. 25 * 0. 33e) I = 200,000 + (0. 33 * 103,636) + (0. 40 * 94,545)