Bradley Corporation
Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department.
$\begin{array}{llcc}
\underline{\text { Dept. }} &\underline{ \text { DirectCosts } }&\underline{ \text { Employees } }&\underline{ \text { Asset Value }} \
\text { Admin. } & \$ 900,000 & 25 &\$ 450,000 \
\text { Personnel } & 350,000 & 10 & 600,000 \
\text { A } & 700,000 & 15 & 300,000 \
\text { B } & 200,000 & 5 & 150,000\
\text { C } & 250,000 & 10 & 800,000
\end{array}$

Refer to Bradley Corporation.Assume that Administration costs have been allocated and the balance in Personnel is $860,000.What amount is allocated to C (round to the nearest dollar)?

Question

Bradley Corporation
Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department.
$\begin{array}{llcc}
\underline{\text { Dept. }} &\underline{ \text { DirectCosts } }&\underline{ \text { Employees } }&\underline{ \text { Asset Value }} \
\text { Admin. } & \$ 900,000 & 25 &\$ 450,000 \
\text { Personnel } & 350,000 & 10 & 600,000 \
\text { A } & 700,000 & 15 & 300,000 \
\text { B } & 200,000 & 5 & 150,000\
\text { C } & 250,000 & 10 & 800,000
\end{array}$

Refer to Bradley Corporation.Assume that Administration costs have been allocated and the balance in Personnel is $860,000.What amount is allocated to C (round to the nearest dollar)?

Quizplus · Accepted Answer

To allocate Personnel costs to the production departments, we need to use a chosen allocation base. Here, we have been told that Personnel costs are to be allocated based on the number of employees in each department. Using this method, we first need to calculate the total number of employees in the production departments:

Total employees in production departments = 15 + 5 + 10 = 30

Then, we can determine the Personnel cost allocation rate:

Personnel cost allocation rate = $860,000 / 10 = $86,000 per employee

Finally, we can allocate Personnel costs to each production department based on the number of employees in that department:

Allocation to A = 15 x $86,000 = $1,290,000
Allocation to B = 5 x $86,000 = $430,000
Allocation to C = 10 x $86,000 = $860,000

Therefore, the amount allocated to C is $860,000.

Bradley Corporation Bradley Corporation Has Three Production Departments A,B,and C

Bradley Corporation
Bradley Corporation Has Three Production Departments A,B,and C