Casey Corporation is organized into three divisions:
Northwest, Midwest, and Southern. The firm has provided you with the following data, pertinent to allocating its annual corporate overhead cost of $3,200,000.

Required:
a. Determine the overhead cost allocated to each division if Casey uses head count as the allocation basis. Repeat the exercise with revenue as the allocation basis and with profit as the allocation basis.
b. Compare the costs allocated to the divisions under each of the three cost drivers. Why is the allocation using head count the same as the allocation using revenue? Why is the allocation using head count different from the allocation usingprofit?

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Northwest Division Midwest Division Sorn Division Total Head count Revenue Profit 800 $50,000,000 $60,000,000 50,000,000 $160,000,000 1,200,000 $5,000,000 250 300 250 2.000,000 $1,800,000