Fernando and Gray Consulting Group uses a centralized IT support department to serve its 4 divisions. It incurs $72,000 year to run this department and allocates the cost of this department based upon the number of employees in each division. The detail is as follows: Audit Tax 65 95 Advisory 110 Legal 30 Total 300 How much of the $72,000 should be allocated to each division?

Fernando and Gray Consulting Group uses a centralized IT support department to serve its 4 divisions. It incurs $72,000 year to run this department and allocates the cost of this department based upon the number of employees in each division. The detail is as follows: Audit Tax 65 95 Advisory 110 Legal 30 Total 300 How much of the $72,000 should be allocated to each division?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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