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1) (16 points) At the Todd Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.

Total personnel department costs are $420,000.

Department A B C

Number of employees 30 270 100

The number of new hires 8 12 20

a) If the number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A?

b) If the number of new hires is considered the cost driver, what amount of personnel costs will be allocated to Department A?

2) (12 points) Maggiolo Company sells several products. Information of average revenue and costs is as follows:

Selling price per unit $28.50

Variable costs per unit:

Direct material $5.25

Direct manufacturing labor $1.15

Manufacturing overhead $0.25

Selling costs $1.85

Annual fixed costs $420,000

The number of units that Maggiolo must sell each year to break even is:

3) (12 points) The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows:

Direct materials $50

Direct manufacturing labor 8

Variable manufacturing overhead 12

Fixed manufacturing overhead 20

Sales commissions (2% of sales)

Sales$250

Administrative salaries 9

What are the inventoriable costs per unit associated with Product ORD203?