ABC Costing, accounting assignment help

  • Suppose you are the manager of a widget-production company. The
    company’s two support departments, Purchasing and Human Resources, are
    currently allocated amongst its three manufacturing departments:
    Laminating, Fabricating, and Assembling. Currently, the support
    department’s costs are divided equally among the three manufacturing
    departments. The company has conducted an analysis using the number of
    employees in the manufacturing departments as the activity driver. The
    results of the analysis indicate Fabricating would receive 50% of the
    total costs of Purchasing and Human Resources, Laminating would receive
    30%, and Assembling would receive 20%. As a manager, would you suggest
    the firm adopt the new activity-driven allocations or retain the current
    allocation method? Choose a method of allocation and provide your
    rationale. Identify at least two additional cost drivers that could be
    used to allocate the costs of the two support departments and explain
    the rationale you used to select the additional cost drivers.

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