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Managerial Accounting Exercise- Solve the problem below and explain how it is done. Thanks Problem 6-9 Choice of Allocation Based. Problems with Cost Allocation Tilden
Managerial Accounting Exercise- Solve the problem below and explain how it is done. Thanks
Problem 6-9 Choice of Allocation Based. Problems with Cost Allocation Tilden Financial Services has two divisions, Financial Planning and Business Consulting. The firm's accountants are in the process of selecting an allocation base to allocate centrally provided personnel costs to the divisions. Two allocation bases have been proposed: salary and headcount (number of employees). Expected costs and data relating to the allocation follow: Financial Plannin Business Total $ 1,500,000 g Consulting Expected personnel costs Salaries Headcount S 15,000,000 $ 5,000,000 50 200 Required a. Prepare a schedule showing the allocations to the two divisions using each allocation base nanc iness usines33 Consulting Allocation Amount To Be Planning Financial Planning Consulting Allocation Base Allocated Salaries Headcount Allocation b. Referring to your answer to a, explain why allocations are sometimes considered arbitrary
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