A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use
Question:
A manufacturing plant produces two types of widgets: standard model; deluxe model. Each unit requires the use of direct labor and the labor time per unit differs between models. Manufacturing is done in production runs and each run has a set up involving the programming of machinery. For January, the plant recorded the following:
Standard Deluxe
2,000 1,000 Units produced
$20,000 $30,000 Direct labor costs
4 12 Number of production runs
Assume that the plant had only two manufacturing overhead costs: $180,000 salaries of production supervisors; $150,000 setup costs
Determine the allocation ratio for assigning the setup costs to the Standard Model.
Horngrens Accounting
ISBN: 978-0134674681
12th edition
Authors: Tracie L. Miller nobles, Brenda L. Mattison, Ella Mae Matsumura