Identify the cost allocation system that would benefit this company most. Justify your response. b) Does this cost allocation system meet management planning and control goals? Explain. c) What are the ethical implications that should be considered with this cost allocation system? d) Describe the ethical implications of direct costs versus indirect costs. What considerations should be made when selecting one of these two?
Budgeted Unit Actual Volume Flexible Budget
Amounts Amount
Revenues $ 21.00 47,000 $987,000
Variable Costs
DM-Plastic 4.50 47000 211,500
DM-Cedar 0.75 47000 35250
Direct Manuf. Labor 6.00 47000 282000
Variable Manuf. Overhead 0.06 47000 2820
Total Variable Manufacturing Costs 11.31 89676 531570
Fixed Manufacturing Overhead 95000
Total Manufacturing Costs 626570
Gross Margin $360,430