Answer the Following Questions Using the Information Below:
at the Gregan

question 132

Multiple Choice

Answer the following questions using the information below:
At the Gregan 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 $320 000.
$$\begin{array} { l r r r } \text { Department } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathrm { C } } \\\text { Number of employees } & 30 & 270 & 100 \\\text { The number of new hires } & 8 & 12 & 5\end{array}$$
-If the number of new hires is considered the cost driver,what amount of personnel costs will be allocated to Department A?

• A)$24 000
• B)$40 000
• C)$102 400
• D)$10 666

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Definitions:

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods or levels of happiness.

Risk Neutral

A condition or attitude where an individual or entity is indifferent to risk when making investment or economic decisions, focusing solely on potential outcomes without regard to the associated risks.

Insurance

A financial product that provides compensation or coverage against losses or damages, based on the principle of risk pooling and premiums paid by the insured parties.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1 where 1 indicates certainty.