Recall the example of the Mermaiden film distribution company’s planning for next year. Mermaiden has four films for which it has projections of demand, unit prices, and film-specific fixed and variable costs. In addition to the film-specific costs, Mermaiden has overhead of $150,000.
Download the data for the financial performance of these four films.
Then, try out two different overhead allocation models:
What are the merits and drawbacks of each allocation model? Do the two models of accounting for overhead lead to different business decisions?
Discuss your analysis in a two-page essay. Add tables and charts to back up your assertions.