Refer to exercise 9-24. Kurt, the manager of the Ohio unit, is unhappy with the results of the controller's study. He asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to Kurt that the rates would be as follows:
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Required :
a. Kurt argues that Ohio should only be allocated the variable costs from this system, because the company would have to pay the fixed costs even if Ohio did not exist. Compute the cost allocated to each unit using the approach Kurt prefers.
b. Do you agree with Kurt?Explain.