Question
Dawn and Sons handcraft two varieties of squirrel-proof bird baths, Small and Large. Each Small bird bath takes 4 hours of labor while each Large
Dawn and Sons handcraft two varieties of "squirrel-proof" bird baths, Small and Large. Each Small bird bath takes 4 hours of labor while each Large bird bath takes 6 hours of labor. The firm currently makes 20,000 Small and 10,000 Large bird baths, using a total of 140,000 labor hours. Annual fixed costs currently total $2,100,000, and are allocated based on the number of units.
Suppose Dawn and Sons change their product mix to produce 15,000 units each of the Small and Large bird baths next year. Based on their current cost allocation model, what are their expected fixed costs per year?
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