Case Study #2 - Big Al's Pizza

Case Study #2 - Big Al's Pizza - Mallette, Lauren Mathai,...

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Mallette, Lauren Mathai, Ron Managerial Accounting October 4, 2010 Case Study #2- Big Al's Pizza A. No, Big Al's can not allocate overhead based upon the number of pizzas since more than one type of pizza is being produced. In comparison to the meat pizza, the veggie pizza requires more overhead costs. B. Direct labor would be a logical cost driver for the allocation of overhead, if the overhead fluctuates with the hours of direct labor incurred. C. $2.14 Reasoning: Predetermined Overhead Rate= Estimated overhead/Estimated units of cost driver. Our predetermined overhead rate is $202,650 which is 5% more than year one. Our estimated units of direct labor hours is 94,500. D, E, and F: Big Al's Pizza, Inc. Schedule of Cost of Goods Manufactured For Year 2 Beginning Inventory of Raw Materials $1,973 Add purchased raw materials $276,138 Raw materials available for sale $278,111 Less ending inventory of raw materials ($3,487) Raw materials used in production $274,624 Add direct labor hours $862,830
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Case Study #2 - Big Al's Pizza - Mallette, Lauren Mathai,...

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