Business: A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Plus Max Units produced 200 16,800 Batch size (units) 20 480 Number of setups 10 35 Direct labor hours per unit 6 6 Total direct labor hours 1,200 100,800 Cost per setup $ 2,040 Total setup cost $ 91,800 With traditional allocation of overhead costs, using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated

where is the question at Explanation:...

A firm produces and sells two products, Plus and

jewelia2801

25.01.2022

$5.4 and $5.4

Explanation:

The formula and the computation is shown below:

= Total setup cost ÷ total direct labor hours

= $91,800 ÷ 102,000 hours

= $0.9

For plus:

Setup cost is

= $0.9 × 6

= $5.4

And,

For Max:

= $0.9 × 6

= $5.4

We simply multiplied the per unit with the direct labor per unit so that the allocation to each unit could come

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