Product Producers, LCC (PP) manufactures a widget that is sold around the world. PP has a janitor support department and an HR support department with two production departments--Production Dept. 1 and production Dept. 2 . Both of this support departments provide services to productions Dept. 1 and production Dept. 2. the support departments provide janitorial and HR support to each other as well. Total quarterly cost for the Janitor Dept. and HR Dept. are provided below. janitor Dept. Cost are assigned based on the occupancy of square footage and HR Dept. cast are assigned using headcount of personnel.
a) Janitorial costs will be allocated to the production departments using a fixed cost allocation rate with the basis established on the amount of square foot space budgeted to be used each production period. HR costs will be tracked to the production departments using a variable cost tracking rate with the basis established on the normal capacity of headcount, that is, on the headcount capacity that can be supported regardless of the headcount budgeted for the upcoming production period. b) Janitorial costs will be allocated to the production departments using a fixed cost allocation rate with the basis established on the amount of square foot space budgeted to be used each production period. HR costs will be tracked to the production departments using a variable cost tracking rate with the basis established on the budgeted number of personnel in each department for the upcoming production period. c) Janitorial costs will be allocated to the production departments using a fixed cost allocation rate with the basis established on the normal capacity of square foot space, that is, on the capacity space available to use regardless of actual use planned for each production period. HR costs will be tracked to the production departments using a variable cost tracking rate with the basis established on the budgeted number of personnel in each department for the upcoming production period, d) Janitorial costs will be allocated to the production departments using a fixed cost allocation rate with the basis established on the normal capacity of square foot space, that is, on the capacity space available to use regardless of actual use planned for each production period. HR costs will be tracked to the production departments using a variable cost tracking rate with the basis established on the normal capacity of headcount, that is, on the headcount capacity that can be supported regardless of the headcount budgeted for the upcoming production period.Janitor Dept. HR Dept. Production Dept. 1 Production Dept. 2 Square feet 1.000 1.600 4.000 7,000 Headcount B 10 50 70 Support dept. costs $130.000 $250.000 If PP decides to use a dual rate approach. determining that janitorial costs are fixed with respect to square footage of space. while HR costs are variable with respect to headcount, which answer describes the rates used in the support cost allocation process