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Would a share of food service costs be allocated

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Exercise - Choice of Allocation Base (Cost Driver) for Service Departments

Auburn Banking and Loan Company has six service departments:

1. Human Resources (hires employees and manages benefits)

2. Duplicating (performs copy services)

3. Janitorial (provides routine cleaning services)

4. Accounting (provides accounting services)

5. Graphic Design (designs forms)

6. Food Services (provides free breakfast and lunch to employees)

The services are used by the company's two subsidiaries, Auburn Personal Banking and Auburn Business Banking.

Required

a. Suggest allocation bases to be used in allocating the service department costs to the two subsidiaries.

b. Food services are used by employees in the human resources department. Would a share of food service costs be allocated to human resources under the direct method of allocation?

Reference no: EM131826891

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