Question

The Personnel Department at Lastal Enterprises handies many administrative basis for the two sons that make uplasia LadBack and stressedut Laack vion manages the company's t onal business e This business, although lucrative is currently not growing Stressedout on the other hand is the company's new business which has experienced coedigt growth for each of the last three years The cost allocation system at Las call alocales al corporate costs to the divisions based on a variety of cost a location bases Personnel costs are located based on the average number of employees in the two o ns There are two basic activities in the Personnel Department The first, which is called employee maintenance manages employee records of this activity occurs when employees are red or leave the company The other activity is payrol, which is an ongoing activity and requires the same amount of work for each employee regardless of the employees salary Assorted data for Las Call for the last year follow Laidback Stressed out Number of employees average Employees hired leaving The Personnel Department incurred the wing coses ning the year 2. Under the current location system what are the cost we be located from personnel to L DK To Stressedou Do not round intermediate calculations Laidback Stressedut b. Suppose the company implements activ-based cost system for personnel the two actes employee maintenance and payroll Use the number of employees h and the average number of empoyees for payroll costs What are the costs that w e allocated om personnel LadBack To Stressroo7 a ving a reco Laldack Stressed

Answer 1

Part a	Overhead Cost per employee =$165,000 / 135 employees =$1,222.22222222 per employee
		LaidBack	StressedOut
	No. of employees	100	35
	Overhead Cost per employee	$      1,222.22222222	$ 1,222.22222222
	Allocated Costs	$                  1,22,222	$                42,778
Part b
	Employee Maintainance cost per employee leave/joined =$138,000 / 23 =$6,000 per employee leave/joined
	Payroll cost per employee =$27,000/135 =$200 per employee
		LaidBack	StressedOut
	Employee Maintainance($6,000*No. of employee leave/joined)	$                30,000.00	$        1,08,000.00
	Payroll cost($200*No. of average employees)	$                20,000.00	$             7,000.00
	Total	$                50,000.00	$        1,15,000.00