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The Personnel Department at Hemandez Bros is centralized and provides services to the two operating units: Miami and Nenw York The Miami unit is the
The Personnel Department at Hemandez Bros is centralized and provides services to the two operating units: Miami and Nenw 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 emplayees in order to determine unit profitability The current rate is $690 per employee Data for the fiscal year just ended show the following Miami New Yerk 1330 19 480 39 Number of new hires Number of emplyees deparling Orlando, t e manager o the New York unt would be as follows s unhappy ith he results o he co roller's study. H as s e controller o develop separate rates for f ed and variable costs in he Personnel e ar ment The controller reports back to Orlando that the rates Alocation based orn Vanable Rate $145 per employee $2,180 per transtion s 245 peremployee $4,850 per transition S 390 per employee S r 050 per transiton Transticns Required: a. Orlando argues that New York should only be allocaled the variable costs from this syslem, because the company would have to pay the fixed costs even if New York did not exist Cormpute the cost allocated to each unit using the approach Orlarido Mami New York
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