A major bank has a head office in an industrial park outside Regina, Saskatchewan. 

The head office has four departments: telephone banking, IT support, human resources,

and transaction processing.

At the beginning of the year, the company opened a cafeteria that provides free lunches

to the 700 employees who work in the head office. The cost to run the cafeteria,

including food and labour, is $300,000 per year.

The CEO of the company wishes to have more accurate reporting and wants to allocate

this cost to the various departments. Employees swipe their cards to access the

cafeteria.

The consumption data reported from employee card swipes is as follows:

Employees

Meals served

Telephone banking

300

60

,000

IT support

100

30

,000

Human resources

50

2

,500

Transaction processing

250

93

,750

Total

700

186

,250

Core 2 Workshop Activities

Scenario 4 - Required:

1.

Select which costing method is recommended for this scenario. Explain why you recommend the method.

What is the cost allocated to each department?