produces and sells two products, Plus and Max. The following information is avai

Question

produces and sells two products, Plus and Max. The following information is available relating to setup costs (o part of factory overhead; Plus Max Units produced Batch size (units) Number of setups Direct labor hours per unit Total direct labor hours 380 18,580 20 580 37 19 3,848 148,80 Cost per setup Total setup cost 2,258 $126,000 Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is: Mutiple Choice $14.06: $.31 $3130; $9000 $56.00 $56.00 $m2.50 $4.50 $38000: $18.50000

Explanation / Answer

Cost allocated to:

Plus=(2250*19)=$42750

Max=(2250*37)=$83250

Hence cost allocated to each unit of:

Plus=(42750/380)=$112.5

Max=(83250/18500)=$4.5

Hence the correct option is D.

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