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Exercise $7-25($Algo$)$ Selection of an Allocation Base $[$LO $7-1,$

$7-3]$

Great Ape Glassworks manufactures glass used for the screens on

smartphones. It has two producing departments, P$1$ and P$2,$ and only

one service department, S$1.$ 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.

'art $1($Algo$)$

equired:

Determine the total estimated overhead cost for each of the producing departments

fter allocating the cost of the service department:

$.$ Using employee headcount as the allocation base.

$.$ Using occupied space as the allocation base.

Using productive capacity as the allocation base.

Using the $3-$year average use as the allocation base.

Red text indicates no response was expected in a cell or a formula$-$based calculation is incorrect; no points deducted.