Determine the cost allocation

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Reference no: EM134029887

Question

Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the company's human resources (HR) department. The annual costs of the HR department total $32,000,000 a year. You have the following selected information about the two divisions: Number of Employees Wage and Salary Expense ($000) Northern 3,300 $ 285,200 Southern 2,700 174,800.

Determine the cost allocation if $18.5 million of the HR costs are fixed and allocated on the basis of employees, and the remaining costs, which are variable, are allocated on the basis of the wage and salary expense total.

Reference no: EM134029887

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