Question

Crimson Industries is in the process of evaluating allocation bases so that selected costs can be charged to responsibility centers.


Would the number of employees likely be a good base for allocating the costs of Human Resources, Building and Grounds, and Repairs and Maintenance to user centers?


a. Human Resources: Yes Buildings and Grounds: Yes Repairs and Maintenace: Yes


b. Human Resources: No Buildings and Grounds: Yes Repairs and Maintenace: Yes


c. Human Resources: Yes Buildings and Grounds: No Repairs and Maintenace: Yes


d. Human Resources: Yes Buildings and Grounds: No


e. Human Resources: No Buildings and Grounds: Yes Repairs and Maintenace: No

Answer 1

Answer:

d. Human Resources: Yes Buildings and Grounds: No  Repairs and Maintenace: No

Explanation:

Human resources is the human capital resource of an organization. It incudes allthe emploeeys of the organization. The number of employees is the suitable basis for cost allocation to human resource because the number of employees drives the cost of this cost centre. For Building and Grounds, and Repairs and Maintenance, number of employees is not a suitable basis because it does not drive the cost of these cost centres.