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The 12 employees that perform the setup process and

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number of employees that work in setup department. The 12 employees that perform the setup process and are paid $33,750 each, which comes out to $405,000 allocated to the setup activity. The total for the occupancy cost is $18,000, which broken down comes to $18 a square foot. Half of the occupancy cost is allocated to production scheduling which means that the other half must be allocated to setup process. We find that the setup process occupies about 500sq ft or about half the size of the department. The 500sq ft is the resource driver and using the cost driver of $18 it comes to $9,000 allocated to the setup activity. Furniture and Fixtures are grouped into work stations so that would make a perfect resource driver. Each work station cost $400 and only one is used by the setup personnel, but another one of the work stations is used by managers are since most of
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their time is spent managing the two activities then allocate it accordingly. Since 70% of manager’s time is spent on supervising the setup personnel than 70% of the $400 should be allocated to the setup activity which comes out to be $280. The total cost for the setup activity would be $680. Computers and software costs are directly linked to the work stations because each work station has a computer on it so there are 5 computers. The resource driver would be the number of computer or it could be the
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