Booth Financial Services, LLC has two revenue producing departments, Financial Planning and Business Consulting.

Booth Financial Services, LLC has two revenue producing departments, Financial Planning and Business Consulting. The accounting department is trying to determine the best method to allocate $1,000,000 of common costs (secretarial staff, reception personnel, etc), either by salary or number of employees. Information on the revenue departments are as follows: Department Employees Salaries Financial Planning 150 employees $10,000,000 Business Consulting 50 employees $5,000,000 (a) Allocate the $1,000,000 common costs to the two revenue departments using both methods.(b) Why are allocations called arbitrary?

Booth Financial Services, LLC has two revenue producing departments, Financial Planning andBusiness Consulting. The accounting department is trying to determine the best method toallocate…

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