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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
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 $510 per employee. Data for the fiscal year just ended show the following. Number of employees Number of new hires Number of employees departing Miami New York 1,210 310 11 21 19 29 controller's office to estimate the amount of Personnel Department cost associated with routine personnel matters (benefits, and so on) and those associated with hiring employees and assisting with departing employees (transitions). The controller responds that if they separated the overhead TITLURILIITRITUMUrruu LIIULILITY y Jepuruluu II vvrricuu costs on this basis, the rates would be $210 per employee for routine matters and $5,700 for each transition (each hiring and each departure counts as one transition). Recompute the costs allocated to each unit using the separate rates for routine and transitional matters. Miami New York a. Using current allocation system Using separate rates b
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