I need assistance. I did some but I think I should have included the fixed manufacturing cost of $5 million in Method B and $4.5 million fixed cost in Method A. But I am uncertain. The instructions along with my answer sheet is attached. Also, need to know if my recommendation is correct. Thank you.

Step 1: Allocate Costs You have been asked to look at production options for the Android01 since production methods and allocation of costs have implications for cost-per-unit. There are two alternative methods of production being considered. Begin by gathering data (using financial information in decision making), then answer various questions to determine the suitability of the project. Production A Costs are as follows: $4.5 million per year in rent for factory and machinery components and labor in the amount of $12 million will produce 300 units per year Production B In an alternative production method, the production of Android01 will share some production facilities and service divisions with Processor01. Fixed costs are $5 million per year, and are to be assigned at the rate of 30 percent to Android01 and 70 percent to Processor01. The variable cost of the production facilities and service divisions is $20 million per year. The square footage of factory space and labor needed for the production of 500 units of Processor01 and 300 units of Android01 are listed below. Sq. Ft. Labor Processor01 (500 units) 70,000 120 Android01 (300 units) 30,000 80 The remaining cost for the production of Android01 is for components, at $25,000 per unit. Question 1: In Method B, what would be the cost-per-unit of producing Android01 using factory space as the allocation basis? What would be the cost-per-unit using labor as the allocation basis? Be sure to show your calculations in Excel and provide a narrative summarizing the results of your analysis and make recommendations for the benefit of company. Allocation of Costs Calculations Total Variable Cost Cost Allocation using factory space Processor01 Android01 500 units 300 units Android01 (per unit) Allocation of using labor Processor01 Android01 500 units 300 units Android01 (per unit) Total per unit cost for Andoid01-Production Method B Variable cost Add: component cost Total: Total per unit cost for Andoid01-Production Method A Rent cost Component and labor cost Total cost Per Unit Cost Question 1 Question 1: In Method B, what would be the cost-per-unit of producing Android01 using factory space as the allocation basis? What would be the cost-per-unit using labor as the allocation basis? Recommendation It would be more beneficial for company to allocate costs using the Production Method B-Factory Space as basis of allocation 300 units $20,000,000.00 20,000,000*70,000/100,000 20,000*30,000/100,000 $14,000,000.00 $6,000.00 6,000,000/300 $20,000.00 20,000,000*120/200 20,000,000*80/200 $12,000,000.00 $8,000,000.00 8,000,000/300 $26,666.67 Cost Allocation using Factory Space Cost Allocation using Labor $20,000.00 $26,666.67 $25,000.00 $25,000.00 $45,000.00 $51,667.00 Cost Allocation using Factory Space $4,500,000.00 $12,000,000.00 $16,500,000.00 $55,000.00 $45,000.00 $51,667.00