Alpha Manufacturing Inc.

Managerial Accounting Process: Cost Allocation

Category	Amount ($ million)
Direct Materials	30
Direct Labor	20
Manufacturing Overhead	15
Selling & Admin	10

Requirements:

1. Cost Allocation Methodology:
   • Explain how Alpha Manufacturing allocates its manufacturing overhead costs to different products using a predetermined overhead rate based on direct labor hours.

1. Cost-Volume-Profit Analysis:
   • Conduct a cost-volume-profit (CVP) analysis to determine the breakeven point in units and dollars for Alpha Manufacturing based on the provided cost structure.

1. Budget Variance Analysis:
   • Analyze the budget variances for direct materials and direct labor compared to the actual costs incurred during the period.

1. Strategic Cost Management:
   • Discuss two strategies Alpha Manufacturing could implement to reduce its manufacturing overhead costs while maintaining product quality.

1. Financial Reporting Impact:

Explain how the allocation of manufacturing overhead costs impacts Alpha Manufacturing's income statement and balance sheet.