Solved: The Fleming Foundation is a charitable

organization founded by G

The Fleming Foundation is a charitable organization founded by Gaylord Fleming and Sandy
Fleming. The Flemings intended for the charity to provide programs in health care for the
elderly, particularly those in poverty. The two main program divisions of the foundation are
mental health for the elderly and housing for the elderly. In addition to these programs, the
Foundation also provides health care educational programs and has a significant fund-raising
effort to help the Foundation to grow and to accomplish the goals of the founders. The
Foundation is organized into two main departments-education and program management.
These departments are supported by two service departments-information technology (IT) and
administration.
There are $418,000 of costs directly traceable to each of the four departments. An additional
$65,000 of indirect costs are shared among the four departments-$50,000 of which is allocated
to the departments based on direct labor-hours and $15,000 to the departments based on the
number of personnel (headcount) in the departments.
The cost, labor-hours, and headcount in these departments in the most recent year are as
follows:

IT serves Education, Administration, and Program Management 20 percent, 20 percent, and 60

percent of its time, respectively. Administration serves Education, IT, and Program Management
30 percent, 10 percent, and 60 percent, respectively.
The costs of the two main departments are allocated to the two programs as follows: the costs
in education are allocated on the basis of labor-hours in the programs, while the costs in
program management are allocated using the headcount used in the two programs. The
following table shows the labor-hours and headcount consumption by the two programs.

Required
Determine the costs allocated to the mental health and housing programs using the direct
method, the step method (assuming that IT goes first), and the reciprocalmethod.

ANSWER
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