12 Jul WHAT IS THE APPROPRIATE ALLOCATION BASE FOR THE ASSIGNMENT OF FACTORY OVERHEAD COSTS TO JOBS AT ALBERTO COMPANY?
Alberto has two options for allocation base (cost drivers) – direct labor hours (DLH) and direct materials cost (DMC). Alberto has compiled data for the past several months that are on the Excel file sheet named “Cost Accountingâ€. What is the appropriate allocation base for the assignment of factory overhead costs to jobs at Alberto Company? Why? Refer to your computed R Squares in your answer and the interpretation.
Overhead Cost DLH Materials Cost
$678,145 948 $491,618
$658,200 767 536,311
$737,981 927 715,081
$618,309 758 473,742
$638,254 853 482,680
$538,527 569 491,618
$797,818 805 759,774
$578,418 626 482,680
$598,363 683 487,149
$718,036 773 581,003
$698,090 760 625,696
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