Essay
Rush Company is trying to find an appropriate allocation base for factory overhead. Presented are five months of data: 
r = 
Required:
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 their allocation base for factory overhead? Why?
Correct Answer:
Verified
Correct Answer:
Verified
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