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Question - Chilton Day School allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools. Last year the allocations (000s omitted) were as follows:
Preschool
Middle School
High School
Total
Tuition revenue
$1,700
$2,000
$2,400
$6,100
Marketing and administration
375
425
500
1,300
In the current year, the middle and high schools experienced no change in revenues, but the preschool's tuition revenue increased to $2.1 million. Marketing and administrative costs rose to $1,450,000.
Required - Using revenue as an allocation base, how should the costs be allocated for the current year?
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