Reference no: EM132526941

It is estimated that it will cost $88,000 to run the maintenance department at Giuliani Company in the coming period. Santorum is trying to determine whether to allocate these costs to the two production departments based on the number of employees or on machine hours used in the department. Information about the production departments is given below:

                                                          Department P                         Department B

Number of employees                               60                               40

Anticipated machine hours                      1,500                               3,500

Question 1: How much cost should be allocated to each production department? Explain which allocation base is preferable.