The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000.

Department Department Department

Cost Driver A B C

Number of employees 300 250 50

The number of new hires 15 25 10

Required:

c. Which cost estimation method do you believe Mason Company should use and why? (paragraph is required)