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Question
A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead):| Plus | Max | ||
| Units produced.................... | 200 | 16,000 | |
| Batch size (units)................. | 10 | 400 | |
| Number of setups............... | 20 | 40 | |
| Direct labor hours per unit... | 5 | 5 | |
| Total direct labor hours....... | 1,000 | 80,000 | |
| Cost per setup.................... | $ 1,080 | ||
| Total setup cost.................. | $64,800 |
Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:
A.$21.60; $.54.
B.$54.00; $27.00.
C.$60.00; $60.00.
D.$108.00; $2.70.
E.$200.00; $16,000.00
Answer
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