Selecting an Allocation Base for Service Costs Winstead Inc. is looking for an appropriate allocation base to allocate personnel costs that total $5,000,000. Service department costs are allocated to three production departments: Assembly, Sanding, and Finishing. Management is considering two allocation bases.

Required

a. Calculate the amount of Personnel Department costs allocated to production departments using each allocation base. Sanding: $1,000,000

b. Which allocation base do you think is most reasonable? Why?

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Possible Allocation Base Assembly Number of employees 30 Square feet of space occupied 25,000 Sanding Finishing 20 15,000 50 10,000