Hoger Corporation accumulated the following cost information for its two products, A and B:
|
A |
B |
Total |
|
|
Production volume |
2,000 |
1,000 |
|
|
Total direct man. labor hrs. |
5,000 |
20,000 |
25,000 |
|
Setup cost per batch |
$ 1,000 |
$2,000 |
|
|
Batch size |
100 |
50 |
|
|
Total setup costs incurred |
$20,000 |
$40,000 |
$60,000 |
|
DMLH per unit |
2 |
1 |
A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
|
Traditional |
ABC |
|
|
a. |
$4.80 |
$10.00 |
|
b. |
$2.40 |
$10.00 |
|
c. |
$40.00 |
$200.00 |
|
d. |
$4.80 |
$20.00 |