Question

Fairfield Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: Building Personnel Dept. P1 Dept. P2 Space occupied 2,000 ft. 10,000 ft. 120,000 ft. 70,000 ft. Employees 6 10 80 50 If Fairfield Company uses the direct allocation method, the ratio representing the portion of building costs allocated to Department P1 is a.120,000/202,000. b.190,000/202,000. c.2,000/120,000. d.120,000/190,000.

Answer 1

d.120,000/190,000

Step-by-step explanation:

It is given that Fairfield Company is constructing building department (P1 and P2) in the space provided and it allocates the common Personnel Department cost that is based on number of employees.

From the table given in the question, we can find

The ratio representing the portion of the building cost allocated to the department P1 =
`$(120,000)/((120,000+70,000))$`

The ratio representing the portion of the building cost allocated to the department P1 =
`$(120,000)/(190,000)$`