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Fairfield Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based
Fairfield Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows:
Building | Personnel | Dept. P1 | Dept. P2 | |
Space occupied | 2,000 ft. | 10,000 ft. | 120,000 ft. | 70,000 ft. |
Employees | 6 | 10 | 80 | 50 |
If Fairfield Company uses the direct allocation method, the ratio representing the portion of building costs allocated to Department P1 is
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