Use the Following Information for the Next 3 Questions

question 122

Multiple Choice

Use the following information for the next 3 questions.
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.
-The CEO of the company described above wants to gather information for a decision to outsource the HR function. Which of the following allocation methods would provide useful information?

• A) A job costing system
• B) A dual rate support department allocation system
• C) A single rate support department allocation system
• D) A process costing system

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Definitions:

Labor

The human effort, whether physical or mental, used in the production of goods and services.

Output

The total amount of goods or services produced by a firm, industry, or economy.

Cost

The total expenditure required to produce a good or service, including materials, labor, and other expenses.

Units

Units refer to the basic measure or quantity of a product, service, or the fundamental quantity used in measurement.