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HR costs that should be allocated to each department

Denver Company's human resources department provides training and other services to the company's three operating departments and to one service department. The assembly department has 82 employees; the finishing department has 16 employees; and the sales department has 9 employees. The service department to which human resources provides services is the maintenance department, which has 13 employees. The human resources department costs are allocated using the direct method and based on the number of employees, and the total amount of costs for the department is $187,000.
Determine the amount of human resources cost that should be allocated to each department.

Foster Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,000 containers follows:

Unit-level materials $9,000
Unit-label labor 12,000
Unit-level overhead 7,800
Product level costs 18,000
Allocated facility-level costs 45,000
* One third of these cots could be avoided by purchasing the containers.
Piazza Container Company has offered to sell comparable containers to Foster for $ 4.50 each.

Should Foster continue to make the containers? Support your answer with appropriate computations.

Solution Summary

Your computations are in Excel for you so you can get an idea how to approach these problems. Hints are provided on the computations. Click on the cells to see how each was calculated.