At the Auric Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.
$$\begin{array}{l}
\text { Total personnel department costs are } \$ 287,500 \text {. }\
\begin{array} { l r r r }
\text { Department } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathbf { C } } \
\text { Number of employees } & 70 & 280 & 225 \
\text { Number of new hires } & 25 & 13 & 12
\end{array}
\end{array}$$
-Which cost estimation method is being used by Auric Company?
A) the simple regression method
B) the conference method
C) the account analysis method
D) the marginal costing method

Question

At the Auric Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.
 $$\begin{array}{l}
\text { Total personnel department costs are } \$ 287,500 \text {. }\
\begin{array} { l r r r } 
\text { Department } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathbf { C } } \
\text { Number of employees } & 70 & 280 & 225 \
\text { Number of new hires } & 25 & 13 & 12
\end{array}
\end{array}$$
-Which cost estimation method is being used by Auric Company?
A) the simple regression method
B) the conference method
C) the account analysis method
D) the marginal costing method

Quizplus · Accepted Answer

The conference method involves gathering opinions from managers or experts to determine cost drivers, which aligns with the scenario where department managers suggest using the number of new hires as a predictor of personnel costs.

At the Auric Company, the Cost of the Personnel Department