Exercise 9-32 (Algo) Unitwide versus Department Allocation-Decision Making (LO 9-1, 2, 3) The manager of the Los Angeles office is now unhappy with the results of the controller's study. The manager asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to the Los Angeles manager that the costs would be as follows: Allocation based on Employees Transitions Required: Variable Cost $ 98,000 87,000 Fixed Cost $ 138,000 Total Cost $236,000 117,000 204,000 a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, because the company i would have to pay the fixed costs even if the Los Angeles office did not exist. Compute the cost allocated to each unit using the approach the Los Angeles manager prefers. Detriot Los Angeles Total Allocated Cost
Exercise 9-32 (Algo) Unitwide versus Department Allocation-Decision Making (LO 9-1, 2, 3) The manager of the Los Angeles office is now unhappy with the results of the controller's study. The manager asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to the Los Angeles manager that the costs would be as follows: Allocation based on Employees Transitions Required: Variable Cost $ 98,000 87,000 Fixed Cost $ 138,000 Total Cost $236,000 117,000 204,000 a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, because the company i would have to pay the fixed costs even if the Los Angeles office did not exist. Compute the cost allocated to each unit using the approach the Los Angeles manager prefers. Detriot Los Angeles Total Allocated Cost
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 31P
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