Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions: Construction, Manufacturing, and Military. The total monthly costs of the procurement department are $480,000. Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable. Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed. Below is a list of the purchase orders per division. How much of the procurement department's cost should be assigned to the Military Division?

Question

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions: Construction, Manufacturing, and Military. The total monthly costs of the procurement department are $480,000. Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable. Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed. Below is a list of the purchase orders per division.  How much of the procurement department's cost should be assigned to the Military Division?

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The Answer of Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions: Construction, Manufacturing, and Military. The total monthly costs of the procurement department are $480,000. Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable. Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed. Below is a list of the purchase orders per division.  How much of the procurement department's cost should be assigned to the Military Division?

Henderson Industrial Products Uses a Centralized Service Department for Procurement