How much of amount should be allocated to each division

Reference no: EM131977136

Problem

Smith and Hawk Landscaping Company uses a centralized payroll department to support its 3 divisions. It incurs $45,000 year to run this department and allocates the cost of this department based upon the number of employees in each division. The detail is as follows:

Division                             Number of Employees
Residential Landscaping               50
Commercial Landscaping                  120
Irrigation Services                           30
Total                                             200

How much of the $45,000 should be allocated to each division?

It has been suggested that it would be easier to just allocate $15,000 to each division? While it is easier, why is this not a good approach?

Reference no: EM131977136

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