Respuesta :
You could find the Fund 1 allocation base more appropriate when taking into account the sort of spending to be distributed.
Because the frequency of personnel department expenditures is more likely correlated with the number of employees in each production department, the allocation base number of employees is more appropriate.
A foundation for allocating overhead expenses in cost accounting is called an allocation base. A quantity, such as the number of machine hours utilized, kWh spent, or occupied square area might serve as an allocation base.
a) Number of Employees (in the ratio of 300:200:500)
Allocation Base = (500,000 × 300/1,000) = 150,000
Assembly = (500,000 × 200/1,000) = 100,000
Sanding Finishing = (500,000 × 500/1,000) = 250,000
b) Space Occupied (in the ratio of 100:60:40)
Allocation Base = (500,000 × 100/200) = 250,000
Assembly = (500,000 × 60/200) = 150,000
Sanding Finishing = (500,000 × 40/200) = 100,000
Complete question:
B. Selecting an Allocation Base for Service Department Costs. At Winstead Inc. service department costs are allocated to three production departments: Assembly, Sanding, and Finishing. The company is looking for an appropriate allocation base to allocate personnel department costs totaling $500,000. Management is considering two possible allocation bases (quantitative measures) to use in allocating these costs: the number of employees and physical space occupied. Possible Allocation Base Number of employees Space occupied Assembly 30 100,00 Sandin 20 60,00 Finishing 500 40,000 Calculate the amount of personnel department costs allocated to each of the three production departments using each allocation base: a. number of employees and b. space occupied. Show your calculations. 1.
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