You are the division president of Stable Division of Gigabit Inc. Your best friend is the division of Giga’s Turmoil Division. Each division has 5,000 employees. Last year Stable Division had a turnover of 1,000 employees and Turmoil Division had a turnover of 4,000 employees. Giga’s personnel department only provides service to Stable and Turmoil Divisions. The total annual cost of the personnel department is $100,000. Required: As president of Stable Division how would you allocate the cost of the personnel department? How do you think your best friend, the president of Turmoil Division, would allocate the cost of the personnel department? You are going to be transferred to Turmoil Division but before are transferred you are asked by the CEO to recommend an allocation method. What do you recommend? Is it ethical to recommend different allocation methods depending on which division you will be heading?
You are the division president of Stable Division of Gigabit Inc. Your best friend is the division of Giga’s Turmoil Division. Each division has 5,000 employees. Last year Stable Division had a turnover of 1,000 employees and Turmoil Division had a turnover of 4,000 employees.
Giga’s personnel department only provides service to Stable and Turmoil Divisions. The total annual cost of the personnel department is $100,000.
Required:
As president of Stable Division how would you allocate the cost of the personnel department?
How do you think your best friend, the president of Turmoil Division, would allocate the cost of the personnel department?
You are going to be transferred to Turmoil Division but before are transferred you are asked by the CEO to recommend an allocation method. What do you recommend?
Is it ethical to recommend different allocation methods depending on which division you will be heading?
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