Stock Stuffed Animals Custom Stuffed Animals Sales $7,500,000 $5,000,000 Less direct costs 2,500,000 4,000,000 Less allocated costs 3,375,000

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b.

Which provides the best information on profitability: a single overhead cost pool with headcount as the allocation base, or multiple cost pools using headcount, sales, and space occupied?

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Stock Stuffed Animals Custom Stuffed AnimalsSales$7,500,000$5,000,000Less direct costs2,500,0004,000,000Less allocated costs3,375,0001,125,000Income (loss) before taxes $1,625,000($ 125,000)

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