1. Based on the case(Exhibit 3), are the following costs fixed or variable?

2. Calculate the budgeted allocation rate for the 1987 year.

3. Calculate the burden rate for 1988, 1989 and 1990. (Burden rate is the same in this case as your CALCULATED allocation rate)

4. Calculate gross margins as a percentage of selling price of class I products and class II products based on the 1988 and 1990 model year budgets.

5. Why did the burden rate increase/decrease (see calculation Q3) in 1989?

Please show calculations! Thank you!

MODEL YEAR 1988 1987 1989 1990 Sales Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total $ 70,278 79, 459 41,845 62,986 75,586 $330,154 $ 75, 196 84,776 45, 174 66, 266 79,658 $351,071 $ 79,816 89, 323 47,199 0 0 $216, 338 $ 83, 535 93,120 49,887 0 0 $226,542 Direct Material Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total $ 15,125 31,696 14,886 28, 440 32,218 $122,365 $ 15,756 33,016 15,506 29,525 33,560 $127, 363 $ 16, 312 34,392 16,252 0 0 $ 66,956 $ 16,996 35,725 16,825 0 0 $ 69,546 $ Direct Labor Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total 4,169 5,886 2,621 5,635 6,371 24,682 $ 4,238 6,027 2, 731 5,766 6,532 $ 25, 294 $ 4,415 6,278 2,844 0 0 $ 13,537 $ 4,599 6,540 2,963 0 0 $ 14,102 $ Overhead by Account Number $ $ $ 1000 1500 2000 3000 4000 5000 8000 9000 11000 12000 14000 7, 713 6,743 3,642 2,428 8,817 24,181 5,964 6, 708 5,089 26,936 9,733 $ 7,806 6,824 3,794 2,529 8,888 24,460 5,946 6, 771 5,011 28,077 9, 784 5,572 5,883 2,031 1,354 7,360 20,063 3, 744 5, 948 3,150 15,027 8,025 5, 679 5,928 2,115 1,410 7,433 20, 274 3, 744 5,987 3,030 15,683 8, 110 Total $107,954 $109,890 $ 78,157 $79,393 Factory Profit $ 75,153 $ 88,524 $ 57,688 $63,501 Overhead Account Number Description 1000 Wages and benefits for nonskilled hourly personnel such as janitors and truck drivers. 1500 All plant salaried personnel expense, including benefits, except industrial engineers included in account number 11000 below. 2000 Production supplies such as gloves, safety goggles, and packing material. 3000 Small wearing tools such as grinding wheels, hammers, and screwdrivers. 4000 All purchased utilities, including coal and compressed gas. 5000 Wages for nonproduction employees with specialized skill classifications used for plant maintenance and rearrangement. The benefits associated with these wages are in class 14000 below. 8000 Depreciation on a straight-line basis and property taxes. 9000 Various relatively constant personnel-related expenses, including items such as training, travel, and union representation. 11000 Project expense for one-time setup and some rearrangement of new equipment and machinery 12000 Benefits and overtime premium for production hourly workers, including COLA, state unemployment, and pension. Wages are in direct labor. 14000 Benefits for skilled hourly workers similar to those for production workers. Wages are in account 5000 above. MODEL YEAR 1988 1987 1989 1990 Sales Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total $ 70,278 79, 459 41,845 62,986 75,586 $330,154 $ 75, 196 84,776 45, 174 66, 266 79,658 $351,071 $ 79,816 89, 323 47,199 0 0 $216, 338 $ 83, 535 93,120 49,887 0 0 $226,542 Direct Material Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total $ 15,125 31,696 14,886 28, 440 32,218 $122,365 $ 15,756 33,016 15,506 29,525 33,560 $127, 363 $ 16, 312 34,392 16,252 0 0 $ 66,956 $ 16,996 35,725 16,825 0 0 $ 69,546 $ Direct Labor Fuel Tanks Manifolds Doors Muffler/Exhausts Oil Pans Total 4,169 5,886 2,621 5,635 6,371 24,682 $ 4,238 6,027 2, 731 5,766 6,532 $ 25, 294 $ 4,415 6,278 2,844 0 0 $ 13,537 $ 4,599 6,540 2,963 0 0 $ 14,102 $ Overhead by Account Number $ $ $ 1000 1500 2000 3000 4000 5000 8000 9000 11000 12000 14000 7, 713 6,743 3,642 2,428 8,817 24,181 5,964 6, 708 5,089 26,936 9,733 $ 7,806 6,824 3,794 2,529 8,888 24,460 5,946 6, 771 5,011 28,077 9, 784 5,572 5,883 2,031 1,354 7,360 20,063 3, 744 5, 948 3,150 15,027 8,025 5, 679 5,928 2,115 1,410 7,433 20, 274 3, 744 5,987 3,030 15,683 8, 110 Total $107,954 $109,890 $ 78,157 $79,393 Factory Profit $ 75,153 $ 88,524 $ 57,688 $63,501 Overhead Account Number Description 1000 Wages and benefits for nonskilled hourly personnel such as janitors and truck drivers. 1500 All plant salaried personnel expense, including benefits, except industrial engineers included in account number 11000 below. 2000 Production supplies such as gloves, safety goggles, and packing material. 3000 Small wearing tools such as grinding wheels, hammers, and screwdrivers. 4000 All purchased utilities, including coal and compressed gas. 5000 Wages for nonproduction employees with specialized skill classifications used for plant maintenance and rearrangement. The benefits associated with these wages are in class 14000 below. 8000 Depreciation on a straight-line basis and property taxes. 9000 Various relatively constant personnel-related expenses, including items such as training, travel, and union representation. 11000 Project expense for one-time setup and some rearrangement of new equipment and machinery 12000 Benefits and overtime premium for production hourly workers, including COLA, state unemployment, and pension. Wages are in direct labor. 14000 Benefits for skilled hourly workers similar to those for production workers. Wages are in account 5000 above