At the Spring Valley Company 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.
Total personnel department costs are $282,000.

If the number of new hires is considered the cost driver, what amount of personnel costs will be allocated to Department A? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)
A) $43,759
B) $6,845
C) $109,980
D) $47,913

Question

At the Spring Valley Company 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.
Total personnel department costs are $282,000.

If the number of new hires is considered the cost driver, what amount of personnel costs will be allocated to Department A? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)
A) $43,759 
B) $6,845 
C) $109,980 
D) $47,913

Quizplus · Accepted Answer

Personnel costs of Department A = 15 / (15 + 12 + 11) = 0.39
0.39 x $282,000 = $109,980

At the Spring Valley Company Company, the Cost of the Personnel