Question
Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the companys human resources (HR) department. The annual costs of
Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the company’s human resources (HR) department. The annual costs of the HR department total $14,000,000 a year. You have the following selected information about the two divisions:
Number of Employees Wage and Salary Expense ($000)
Northern 2,310 $ 173,600
Southern 1,890 106,400
Required: Determine the cost allocation if $9.5 million of the HR costs are fixed and allocated on the basis of employees, and the remaining costs, which are variable, are allocated on the basis of the wage and salary expense total.
Northern Southern
Fixed ??? ???
Variable ??? ???
Total ??? ???
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