Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the company’s human resources (HR) department. The annual costs of the HR department total $20,000,000 a year. You have the following selected information about the two divisions: Number of Employees Wage and Salary Expense ($000) Northern 2,640 $ 210,800 Southern 2,160 129,200 Required: Determine the cost allocation if $12.5 million of the HR costs are fixed and allocated on the basis of employees, and the remaining costs, which are variable, are allocated on the basis of the wage and salary expense total. Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the company’s human resources (HR) department. The annual costs of the HR department total $20,000,000 a year. You have the following selected information about the two divisions:
| Number of Employees | Wage and Salary Expense ($000) | |
|---|---|---|
| Northern | 2,640 | $ 210,800 |
| Southern | 2,160 | 129,200 |
Required:
Determine the cost allocation if $12.5 million of the HR costs are fixed and allocated on the basis of employees, and the remaining costs, which are variable, are allocated on the basis of the wage and salary expense total.
Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
The costs are allocated to different departments on the basis of different cost ratios allocation. The costs incurred can be classified as fixed and variable.
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