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Required information Exercise 935 and 936 (Static) The Personnel Department at Hernandez Bros. is centralized and provides services to the two operating units: Miami and

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Required information Exercise 935 and 936 (Static) The Personnel Department at Hernandez Bros. is centralized and provides services to the two operating units: Miami and New York. The Miami unit is the original unit of the company and is well established. The New York unit is new, much like a start-up company. The costs of the Personnel Department are allocated to each unit based on the number of employees in order to determine unit profitability. The current rate is $300 per employee. Data for the fiscal year just ended show the following. Exercise 9-36 (Static) Unitwide versus Department Allocation-Decision Making (LO 9-1, 2, 3) Orlando, the manager of the New York unit, is unhappy with the results of the controller's study. He asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to Orlando tha he rates would be as follows: Required: a. Orlando argues that New York should only be allocated the variable costs from this system, because the company would have to pay the fixed costs even if New York did not exist. Compute the cost allocated to each unit using the approach Oriando prefers

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