Baker Corporation is currently working on two projects that have considerable overlap in the use of equipment and materials. For example, Brian is renting a bulldozer with a minimum lease time of one day and will be able to use it on both projects during the one-day period. The cost of the bulldozer is $8,000 per day (12 hours) and Brian expects that moving the bulldozer from Project One to Project Two will take approximately two hours. Brian provides the following additional data:

Project One Project Two

Total cost of completing project	$77,000	$125,000
Estimated total cost of material used on project	$35,000	$20,000
Estimated total cost of labor used on project	$25,000	$40,000
Estimated hours of bulldozer use on project	6 hours	2 hours

Required:

1. a. Calculate the cost of the bulldozer allocated to the two projects using budgeted hours of bulldozer use as the allocation basis.
2. b. Calculate the cost of the bulldozer allocated to the two projects using the total cost of labor used on the project as the allocation basis.
3. c. Which of the above allocation basis should Brian use? Why?
4. d. Assume you a project manager for Project Two and are going to be evaluated based on the profitability of the project. Which allocation base would you prefer? Justify to your boss why you think allocating the cost of the bulldozer based on that allocation base would be the best allocation basis.