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The commissioners for Walker County are actively negotiating with Falcon Industries regarding the location of a new manufacturing plant in the area. As Falcon is considering several other sites, a "generous tax holiday" may be needed to influence the final choice. The local school district is opposed to any "generous tax holiday."
a. What would probably be involved in a generous tax holiday?
b. Why would the school district be opposed?
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If, instead, the company used a predetermined annual overhead rate, what would be its cost per case? What would be the factory overhead cost component of finished goods inventory? Discuss which method of overhead allocation is preferable.
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