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):
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 Batch size (units) 250 16,500 10 330 Number of setups 25 50 Direct labor hours per unit 5 5 Total direct labor hours 1,250 82,500 Cost per setup $ 1,320 Total setup cost $ 99,000 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: Multiple Choice $26.40; $.66.
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