Reference no: EM132540371

Buckhannon Jewelry Company is in the process of selecting cost drivers that could be used as the bases for allocating various service department costs to its three production divisions: Cutting, Milling and Finishing.

Required:

Question 1: Select the most appropriate allocation base for each type of service department cost described in (a) through (j). Select from among the four allocation bases in the following list. In recording your answer, use the abbreviations provided in the list. Some allocation bases will be used for more than one answer.

List of Possible Choices of Allocation Bases

EMP = Number of Employees

UPC = Units of Production Capacity

SQF = Square Footage Occupied

POH = Budgeted Production Department Overhead

Type of Service Department Cost to be Allocated to the Producing Divisions

a. Cost of operating a cafeteria that services all employees

b. Total payroll department costs

c. Fixed costs necessary to maintain upkeep of the water service

d. Cost of health services

e. Variable cost of the Utilities Department

f. Hiring costs of the Human Resources Department. (Each producing division typically experiences similar percentage manpower increases)

g. Custodial Costs