The Cost of the Personnel Department at the Binix Company

question 150

Essay

The cost of the personnel department at the Binix Company has always been charged to the production departments based upon number of employees.Recently,opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned.Total personnel department costs are $180,000.
$$\begin{array} { l c c c } & \text { Department } & \text { Department } & \text { Department } \\\text { Cost Driver } & \mathbf { A } & \mathbf { B } & \mathbf { C } \\\text { Number of employees } & 390 & 325 & 65 \\\text { The num ber of new hires } & 25 & 35 & 20\end{array}$$ Required:
Using the above data,prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is:
a.number of employees.
b.the number of new hires.
c.Which cost estimation method is being used by Binix Company?

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Definitions:

Content Validity

The degree to which a test or assessment measures all facets of the concept it intends to measure.

Internal Consistency

A measure of reliability; the degree to which different test items that propose to measure the same general construct produce similar results.

Odd-even Reliability

A measure of internal consistency reliability where a test is split into two parts (odd and even items) to assess the consistency of results across these halves.

Parallel Form Reliability

The consistency of test scores across different versions of a test designed to be equivalent in terms of content and difficulty level.