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A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use of direct labor and the labor time per

A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use of direct labor and the labor time per unit differs between models. Manufacturing is done in production runs and each run has a set up involving the programming of machinery.  For January, the plant recorded the following:


        Standard          Deluxe

             2,000             1,000      Units produced

           $20,000          $30,000  Direct labor costs

                4                    12       Number of production runs

 Assume that the plant had only two manufacturing overhead costs: $180,000 salaries of production supervisors; $150,000 setup costs


Determine the allocation ratio for assigning the setup costs to the Standard Model.

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