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The exercise consists of determining the full cost of the departments of a company

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The exercise consists of determining the full cost of the departments of a company. For this purpose, you will have to identify their direct costs (that is, the cost that can be directly associated with the activity of each particular department) and the indirect costs (those that are shared and cannot be traced directly to the activities of any specific department. For the allocation of the indirect costs, it will be necessary to use appropriate allocation criteria. DISTRIBUTORS CORPORATION is a merchandising company that offers its products both online and physically through its own store. The company has a workforce of 40 employees and is structured in eight departments or functional areas. General Management Ia—I—H—r—I—I Adminis Human Information tration Sales Buying Resources Systems Warehouse Store The company links direct costs to departments based on the activities they carry out and which, consequently, generate these costs. The costs of the period, grouped according to their nature, were as follows:

The company links direct costs to departments based on the activities they carry out and which, consequently, generate these costs. The costs of the period, grouped according to their nature, were as follows: DIRECT COSTS Amount (E) Department Depreciation of warehouse equipment 95.857 Sales commissions 73.725 Training 23.964 Advertising 41.948 External maintenance and repairs (warehouse) 52.094 Social Security 237.972 Banking services 3.592 Independent professional services (auditors, lawyers,..) 55.111 Salaries 793.240 Services for maintaining apps and servers 13.283 INDIRECT COSTS Amount (E) Allocation criterion Depreciation of buildings and constructions 89.834 Space occupied Depreciation of office equipment 221.014 Number of employees Insurances 4.863 Space occupied Rent 73.805 Space occupied Security and vigilance 9.292 Number of employees Supplies (water, electricity,...) 59.149 Space occupied Taxes 15.009 Space occupied

The total space of the company of 2200 m2 and the workforce of 41 people are distributed as follows between the different departments: DEPARTMENTS Administration Sales Buying Human Resources Information 5 stems Warehouse Store General Manaement 50 2 TOTAL 2.200 40 Each department has a manager, while the rest of the employees all have the same employment category and salary. The annual salaries per person are listed in the table below. Social Security is proportional to the salaries (30%). Annual salaries per person Other employees Administration . 15.400 Sales . 14.000 Buying . 15.400 Human Resources . 15.400 Department Manager Information Systems . 18.200 Warehouse . 15.120 Store . 15.120 General Management . 15.120

REQUIRED: 1. Trace the direct cost items to the corresponding departments. Justify your choices. 2. 3. Determine the cost of the staff in each department (including all salaries and Social Security). Determine the total direct cost of each department. Determine the total indirect cost of each department. For each cost item, comment on the suitability of the allocation criteria chosen by the company, and propose alternative criteria where necessary. Present a summary table with the direct, indirect and full cost of each department, and make a graphic representation.