Great Ape Glassworks manufactures glass used for the screens on smartphones. It has two producing departments, P1 and P2, and only one service department, S1. The company is able to track overhead to the various departments but wants to allocate the service department costs to the producing departments. However, the company is not sure which of the multiple allocation bases should be selected. The data it collected appear in the table below.

Department Overhead Assigned

P1 $ 150,000

P2 250,000

S1 74,000

Potential allocation base P1 P2

Employee headcount 60 20

Space (in square feet) 2,000 6,000

Productive capacity (in units) 50,000 75,000

3-year average percentage of S1 output used 60 % 40 %

2. Which of the four proposed allocation bases would you recommend and why?