If number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A?

ACCOUNTING

Multiple Choice

At the Jordan 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 $160,000.



Department A B C

Number of employees 30 270 100

The number of new hires 8 12 5



If number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A?

a. $12,000

b. $5,333

c. $51,200

d. $20,000

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