P 7-5:

a) Prepare a table showing how the $9.5 million would be allocated using each of the four proposed allocation schemes (direct labor hours, direct labor dollars, direct material dollars, and square footage of the two plants).

	Texas	Mexico	Total	% Texas
Direct labor hours
Direct labor dollars
Direct material dollars
Square footage
Allocated overhead based on:
Direct labor hours
Direct labor dollars
Direct material dollars
Square footage of plant

b) Discuss the advantages and disadvantages of each of the four proposed allocation methods (direct labor hours, direct labor dollars, direct material dollars, and square footage of the two plants).