Question: Denali, Inc., is looking for an appropraite allocation base to allocate personnel costs totaling $5,000,000. Service department costs are allocated to three production departments: Assembly,

Denali, Inc., is looking for an appropraite allocation base to allocate personnel costs totaling $5,000,000. Service department costs are allocated to three production departments: Assembly, sanding, and finishing. Management is considering two allocation bases. Possible allocation base: number of employees and square feet of space occupied: Assembly 30 25,000 sanding 20 15,000 finishing 50 10,000 required: a. Calculate the amount of personnel department costs allocated to production departments using each allocation base.

b. Which allocation base do you think is most reasonable? Why?

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