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Question: The overhead allocation rate used in the 1 9 8 7 model year strategy study at the Automotive Component & Fabrication Plant ( ACF

Question: The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? Calculate the overhead allocation rate for each of the model years 1988 through 1990. AreThe overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers?Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred?Consider two products in the same product line:Product 1Product 2Expected selling price$62$54Standard material cost1627Standard labor cost63Based on the 1988 and 1990 model year budgets, calculate the expected gross margins as a percentage of selling price on each product. Assume that selling price and material and labor cost do not change from standard.Assume that the selling prices, volumes, and materials costs for the 1991 model year will not change for fuel tanks and doors produced by the ACF of Bridgeton Industries. Assume also that if manifolds are produced, their selling prices, volume, and material costs will not change, either. Use the 1990 calculated overhead amount for your 1991 overhead.Prepare an estimate model year budget for the ACF in 1991If no additional products are droppedIf the manifold product line is droppedExplain any additional assumptions you make in preparing your estimated model year budgets.2. What will be the overhead allocation rate under the two scenarios?

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