The personnel department provides service to operating departments A and B. Personnel's budget is based on 250 employees (100 in department A and 150 in department B). The budget calls for $40,000 in fixed costs, plus $140 per employee. During a recent month the personnel department incurred $41,000 in fixed costs and $42,200 in variable costs. The two operating departments, A and B, had 120 and 140 employees, respectively.
How much would be charged to department B if budgeted costs were allocated based on number of employees?
A) $45,000
B) $44,800
C) $43,600
D) $40,385

Question

Quizplus · Accepted Answer

The budgeted costs for department B would be:Fixed costs: $40,000 / 250 employees * 140 employees = $22,400Variable costs: $140 per employee * 140 employees = $19,600Total budgeted costs for department B: $22,400 + $19,600 = $42,000

The Personnel Department Provides Service to Operating Departments a and B