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17. (10 points) Vacation Co. has three divisions: Outdoors, Skiing, and Cruises. Corporate overhead is currently allocated to divisions based on Division Segment Margin. The
17. (10 points) Vacation Co. has three divisions: Outdoors, Skiing, and Cruises. Corporate overhead is currently allocated to divisions based on Division Segment Margin. The following information is available for the current year: Outdoors Skiing Cruises Revenue $865,000 $650,000 $975,000 Segment Margin $250,000 $325,000 $195,000 Administrative Costs $ 45,000 $180,000 $225,000 Number of Employees 320 360 Floor Space (sq. ft.) 3,000 900 2,100 120 Vacation Co.'s current year fixed overhead costs include the following: Department Human Resources Facilities Corporate Administrative Total Cost $275,000 $150,000 $125,000 $550,000 Allocation Base Number of employees Floor space Division administrate cost a. Allocate the corporate overhead costs to divisions Outdoors, Skiing and Cruises respectively, based on an ABC allocation system that utilizes better cause and effect of resource consumption and allocated cost. Also provide total corporate overhead costs allocated by division. b. Why is the allocation of corporate overhead cost included as part of our study of Strategic Performance Measurement
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