Staff Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: $$\begin{array} { l c c c c }
& \text { Building } & \text { Personnel } & \text { Dept. P1 } & \text { Dept. P2 } \
\text { Space occupied } & 2,000 \mathrm {~m} & 10,000 \mathrm {~m} & 120,000 \mathrm {~m} & 70,000 \mathrm {~m} . \
\text { Employees } & 6 & 10 & 80 & 50
\end{array}$$ If Staff Company uses the sequential allocation method and the support department with the highest percentage of interdepartmental services is allocated first, the ratio representing the portion of Personnel Department costs allocated to Department P2 is
A)50/146.
B)90/140.
C)50/140.
D)50/130.

Question

Staff Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: $$\begin{array} { l c c c c } 
& \text { Building } & \text { Personnel } & \text { Dept. P1 } & \text { Dept. P2 } \
\text { Space occupied } & 2,000 \mathrm {~m} & 10,000 \mathrm {~m} & 120,000 \mathrm {~m} & 70,000 \mathrm {~m} . \
\text { Employees } & 6 & 10 & 80 & 50
\end{array}$$ If Staff Company uses the sequential allocation method and the support department with the highest percentage of interdepartmental services is allocated first, the ratio representing the portion of Personnel Department costs allocated to Department P2 is
A)50/146.
B)90/140.
C)50/140.
D)50/130.

Quizplus · Accepted Answer

The sequential allocation method allocates support department costs starting with the department that provides the highest percentage of its services to other support departments. In this case, we are not given specific percentages of interdepartmental services provided by the Building and Personnel Departments, so we proceed with the information available, focusing on the allocation of Personnel Department costs based on the number of employees.The Personnel Department costs are allocated based on the number of employees. The total number of employees in the producing departments (P1 and P2) is 80 + 50 = 130.The portion of Personnel Department costs allocated to Department P2 is based on its share of the total employees in the producing departments. Department P2 has 50 employees out of a total of 130 employees in the producing departments.Therefore, the ratio representing the portion of Personnel Department costs allocated to Department P2 is 50/130, which simplifies to 50/130. However, since this exact option is not available and assuming a mistake in simplification or option listing, the closest correct approach based on the provided data and question would be to consider the ratio of employees in P2 to the total employees considered for allocation, which is indeed focusing on the number of employees in P2 versus the total in P1 and P2. Given the options and the mistake in simplification acknowledgment, the intended correct approach aligns with calculating the ratio of P2's employees to the total, but the exact correct simplified ratio was not listed among the options.

Staff Company Allocates Common Building Department Costs to Producing Departments