The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000. Department Department Department Cost Driver A B C Number of employees 300 250 50 The number of new hires 15 25 10 Required: Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is
The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000.
Department Department Department
Cost Driver A B C
Number of employees 300 250 50
The number of new hires 15 25 10
Required:
Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is
a. number of employees.
b. the number of new hires.
c. Which cost estimation method do you believe Mason Company should use and why? (paragraph is required)
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