Final answer:
To allocate fringe benefits cost to Division A and Division B, divide the total cost by the total number of employees to get the cost per employee. Then multiply by the number of employees in each division, resulting in $209,198.50 allocated to Division A and $203,421.40 allocated to Division B.
Step-by-step explanation:
The question requires us to allocate the amount of fringe benefits cost to Division A and Division B of Jordan Services Company based on the number of employees in each division. Since Jordan Services Company incurred a total of $412,620 in fringe benefits cost during year 2, and there are 69 employees in total, we will allocate the costs proportionally to each division based on the number of employees.
To determine the amount to be allocated to each division, first calculate the cost per employee by dividing the total fringe benefits cost by the total number of employees:
$412,620 / 69 employees = $5,977.10 per employee
Next, multiply the cost per employee by the number of employees in each division:
Division A: 35 employees × $5,977.10 = $209,198.50
Division B: 34 employees × $5,977.10 = $203,421.40
Thus, the fringe benefits cost allocated to Division A is $209,198.50, and the cost allocated to Division B is $203,421.40.