Question
A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use of direct labor and labor time per unit
A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use of direct labor and labor time per unit differs between models. Manufacturing is done in production runs and each run has a set-up. For the month, 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
Consider the salaries of production supervisors ($90,000). How much of this cost should be assigned to the standard units?
a. 22,500
b. 30,000
c. 36,000
d. 45,000
e. 60,000
f. 67,500
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