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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

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
With traditional two-stage allocation of overhead costs, using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated to each unit of product for Plus and Max, respectively is: $3.20; $3.20. $4.00; $4.00. $.80; $.80. $200.00; $16,000.00. $160.00; $12,800.00.

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