Prepare an estimated model year budget for the ACF in 1991
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, material, and direct labor costs will not change.
a. Prepare an estimated model year budget for the ACF in 1991:
(1) If no additional products are dropped; (2) If the manifold product line is dropped.
Explain any additional assumptions you make in preparing your estimated model year budgets.
b. What will the overhead allocation rate be under the two scenarios?