Question
Reign of fire (ROF), Inc. has three products: Dragon Fire, Wild Fire, and Generic Fire. RO F has allocated indirect expenses as noted below.
Reign of fire (ROF), Inc. has three products: Dragon Fire, Wild Fire, and Generic Fire. RO F has allocated indirect expenses as noted below. They allocate Human Resources expenses based on the number of employees in each profit center. They allocate First Aid expenses based on the number of burn injuries incurred in the prior year. Reign of Fire Financial Information ROF Financial Information Human Total Sales and Expenses Dragon Fire Wild Fire Generic Fire Resources First Aid (HR) Sales 1,600,000 300,000 500,000 800,000 Direct 625,000 125,000 300,000 200,000 50,000 100,000 Expenses Gross Profit 975,000 175,000 200,000 600,000 (50,000) (100,000) Allocated Indirect 50,000 70,000 100,000 10,000 20,000 Expenses Number of 10 50 60 Employees Number of 3,000 1,500 500 Burn Injuries How much Human Resources expense should be allocated to Generic Fire? 30,000 25,000 5,000 50,000
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