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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

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

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