Rush Company Is Trying to Find an Appropriate Allocation Base

question 43

Essay

Rush Company is trying to find an appropriate allocation base for factory overhead.Presented are five months of data:
$\begin{array}{|l|c|c|c|}\hline \text { Month } & \begin{array}{c}\text { Direct Labour } \\\text { Hours }\end{array} & \text { Machine Hours } & \text { Factory Overhead } \\\hline \text { January } & 10 & 3 & \$ 45 \\\hline \text { February } & 20 & 5 & 75 \\\hline \text { March } & 15 & 4 & 70 \\\hline \text { Apri } & 30 & 5 & 130 \\\hline \text { May } & 25 & 3 & 80\\\hline \end{array}$ r= $$\frac { \Sigma ( X - X ) ( Y \cdot Y ) } { \left( \Sigma ( X - X ) ^ { 2 } \Sigma ( Y - Y ) ^ { 2 } \right) ^ {5 } }$$
a.Calculate the correlation coefficient between factory overhead and direct labour hours.
b.Calculate the correlation coefficient between factory overhead and machine hours.
c.Should Rush Company use direct labour hours or machine hours for its allocation base for factory overhead? Why?

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Definitions:

Gender-Role Stereotyping

The assignment of roles, behaviors, and attributes to individuals solely based on their gender, often leading to limiting beliefs and inequalities.

The Glass Ceiling

The glass ceiling is an invisible barrier that prevents certain individuals, often women and minorities, from rising beyond a certain level in a hierarchy, especially in employment sectors.

Role Discrimination

The unfair treatment of individuals based on their assumed roles or positions in society rather than on individual merit.

Division of Labor

The allocation or distribution of tasks, responsibilities, or jobs among individuals or groups, often based on specialization.