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You are the division president of Wood Division of Underwood Enterprises. The only other division at Underwood Enterprises is Plastics Division. Each division has 1
You are the division president of Wood Division of Underwood Enterprises. The only other division at Underwood Enterprises is Plastics Division. Each division has employees. Last year, Wood Division had a turnover of employees employees left and were hired Plastics Division had a turnover of employees. There were no transfers between divisions.
Underwood Enterprise's Human Resources Department only provides services to Wood and Plastics and only when an employee leaves or is hired. The total cost of the Human Resources Department last year was $
Required
a As the Wood Division president, how would you recommend the cost of the Human Resources Department be allocated? What arguments would you use to support your claim?
b How do you think the president of the Plastics Division will recommend allocating the cost of the Human Resources Department? Why?
c You are going to take over as president of the Plastics Division, but before the transfer, the Underwood CFO asks you to recommend an allocation method. How would you recommend the cost of the Human Resources Department be allocated? What arguments would you use?
d Is it ethical to recommend different allocation methods depending on which division you will be heading?
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