Assume that the direct cost per smartphone is:

• Direct material $60
• Direct labour $35

Assume that the factory where the phones are made is also used to make tablets and the annual costs of the factory (rent, insurance, maintenance etc) are $8 million.

How much of this $8 million cost should be allocated to each smartphone made?

The factory is expected to make 200,000 smartphones and 100,000 tablets in the year. It takes 2 hours to make a smartphone and 4 hours to make a tablet.

Select one:

$15

$20

$40

$10