McHugh Company allocates common Building Department costs to producing departments (P1 and P2) based on space...
McHugh 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:
| Building | Personnel | Dept. P1 | Dept. P2 | |
| Space occupied | 2,000 ft. | 10,000 ft. | 120,000 ft. | 70,000 ft. |
| Employees | 6 | 10 | 80 | 50 |
If McHugh 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.90/140.
b.50/140.
c.50/130.
d.50/146.
Homework Answers
Number of employees in total = 80 + 50 = 130
P2 department employees = 50
Personnel dept costs allocated = P2 dept employees / Total
= 50/130
Option C is the answer
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