The Manager of the Molding Department at the Category Products

question 62

Multiple Choice

The manager of the molding department at the Category Products Company is evaluated based on the profit performance of his department.Personnel costs at Category Products are estimated to be $40,000.These costs are allocated based on the number of employees in each production department.The welding department has 40 employees, and the molding department has 60 employees.The personnel department actually incurred $52,000 in personnel costs.The profit of the molding department is down this year because the molding department's share of allocated personnel costs is much higher than last year.The allocation of personnel costs to the molding department is higher in the current year.This is most likely due to

• A)the increase in the company's total production costs.
• B)allocating actual personnel costs to the production departments.
• C)more number of efficient employees in the welding department.
• D)more number of employees in the molding department.

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Definitions:

Credit Balance

The amount appearing on the credit side of an account, indicating the total credits exceed the total debits.

Formal Written Instrument

A legally binding document or contract clearly outlining the terms and conditions agreed upon by the parties involved.

Credit

The trust which allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources (or other materials of equal value) at a later date.

Notes Receivable

Written promises for amounts to be received by a business, typically including interest, from individuals or other entities.