Northstar Company has two operating divisionsMachine Tools and Special Products. The company has a maintenance department that services the equipment in both divisions. The costs of operating the maintenance department are budgeted at $83,000 per month plus $0.6 per machine hour. The fixed costs of the maintenance department are determined by peak-period requirements. The Machine Tools Division requires 60% of the peak-period capacity, and the Special Products Division requires 40%.

For October, the Machine Tools Division estimated that it would operate at 82,000 machine hours of activity and the Special Products Division estimated that it would operate at 52,000 machine-hours of activity. However, due to labor unrest and an unexpected strike, the Machine Tools Division worked only 52,000 machine-hours during the month. The Special Products Division worked 52,000 machine-hours as planned.

Cost records in the maintenance department show that actual fixed costs for October totaled $86,000 and that actual variable costs totaled $79,400.

Required:
1.	How much maintenance department cost should be charged to each division for October? (Omit the "$" sign in your response.)

	Machine Tools Division	Special Products Division
Total cost allocated	$	$

2.

Assume that the company follows the practice of allocating all maintenance department costs incurred each month to the divisions in proportion to the actual machine-hours recorded in each division for the month. On this basis, how much cost would be allocated to each division for October? (Omit the "$" sign in your response.)

	Machine Tools Division	Special Products Division
Total cost allocated	$	$

3.

Whether allocation method used in part (2) above has problems?

	No
	Yes