Question
The personnel department at Brown Furniture Company has $45,000 in budgeted costs for the coming period. Allen is trying to determine whether to allocate these
The personnel department at Brown Furniture Company has $45,000 in budgeted costs for the coming period. Allen is trying to determine whether to allocate these costs to the two production departments based on the number of employees or based on machine hours used in the department. Information about the production departments is given below:
Assembly Painting
Number of employees 15 35
Anticipated machine hours 600 400
Instructions:
a. Calculate the costs allocated to each of the production departments using each allocation base.
b. Which allocation base is preferable?
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