A Number of Costs That Are Commonly Allocated Are Listed $\text { Cost Description } \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Allocation Base Alternatives }$

question 52

Essay

A number of costs that are commonly allocated are listed in the following table followed by two alternative cost allocation bases.
$\text { Cost Description } \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Allocation Base Alternatives }$
$\begin{array}{|l|l|l|}\hline \text { Cafeteria costs } & \text { Direct labor costs } & \text { Number of employees } \\\hline \text { Computer system costs } & \text { Number of departments } & \text { Amount of computer time used } \\\hline \text { Indirect labor costs } & \text { Direct labor hours } & \text { Number of supervisors } \\\hline \text { Indirect materials } & \text { Direct labor hours } & \text { Direct material dollars } \\\hline \text { Factory rent } & \text { Number of departments } & \text { Square footage } \\\hline \text { Fringe benefits costs } & \text { Number of departments } & \text { Number of employees } \\\hline \text { Housekeeping costs } & \text { Square footage } & \text { Number of employees } \\\hline \text { Joint costs } & \text { Number of joint products } & \text { Sales value at split-off } \\\hline \text { Maintenance costs } & \text { Machine hours } & \text { Number of employees } \\\hline \text { Personnel department costs } & \text { Number of employees } & \text { Number of departments } \\\hline\end{array}$
Required:
For each cost listed,circle the cost allocation base that you believe would be more appropriate for allocating the cost.

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Definitions:

Human Resource Management

The strategic approach to the effective management of people in a company or organization so that they help the business gain a competitive advantage.

Mergers And Acquisitions

The process of consolidating companies or assets, where 'mergers' is the combination of companies and 'acquisitions' is one company taking over another.

Effective

Achieving desired outcomes or goals with the least waste of time and effort; efficiency in action or use.

Excise Tax

A tax charged on specific goods and services, such as alcohol, tobacco, and fuel.