Specifically, allocating actual fixed costs which is not directly related to number of sessions by using its budget rate (2:1 for consulting group vs. customer care group) and allocating variable costs based on actual usage of different groups (600 sessions from consulting group and 225 sessions from customer care group). On one hand, the budgeted base can reasonably cover fixed cost prepared at the beginning of the year and then the fixed cost for each session is not affected by actual participation of different groups and users; on the other hand, using actual usage rate can avoid unallocated cost and to be more fair to both groups. As a result, Customer care group would not pay for the variable costs which they didn’t utilize and consulting group doesn’t need to be overcharged the fixed cost of idle of capacity resulted from customer care group used less of their assigned service.
According to description for each items, I would classify salary, benefits, software licenses, depreciation, maintenance contract, course development and office supplies as fixed costs, and professional development travel, phone/fax, training supplies, lunch and other costs as variable costs. Then the cost allocation scenarios can be presented below: Allocation scenarios | Allocate method | Costs | Costs pool amount | Allocation rate | Allocation for consulting group | Allocation for