The Cost of the Maintenance Department at Wildwood Manufacturing Has

Essay

The cost of the maintenance department at Wildwood Manufacturing has always been charged to the production departments based upon number of employees. Recently, an activity analysis of possible cost drivers was performed which indicated that the square feet of space may also be a predictor of costs to be assigned to each department. Given the following data, prepare a report that contrasts the different amounts of maintenance department cost that would be allocated to each of the production departments if the cost driver used is (a) number of employees, and (b) the square feet of space. $\begin{array}{l}&\text { Dept. A }&\text { Dept. B }&\text { Dept. C }\\\text { Number of employees }&{ 300 } &250\\\text { Square feet of space }&15,000&25,000&10,000\end{array}$ Total production department cost: $1,000,000