A major bank has a head office in an industrial park outside Regina, Saskatchewan. The head office has four departments: telephone banking, IT support, human resources, and transaction processing.

At the beginning of the year, the company opened a cafeteria that provides free lunches to the 700 employees who work in the head office. The cost to run the cafeteria, including food and labour, is $300,000 per year.

The CEO of the company wishes to have more accurate reporting and wants to allocate this cost to the various departments. Employees swipe their cards to access the cafeteria.

The consumption data reported from employee card swipes is as follows:

Employees Meals served

Telephone banking 300 60,000

IT support 100 30,000

Human resources 50 2,500

Transaction processing 250 93,750

Total 700 186,250

What is the cost allocated to each department?

Answer rating: 100% (QA)

Allocating Cafeteria Costs to Departments The bank can allocate the cafeteria cost 300000 to each de... View the full answer