Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.
Sturdivant Fasteners, Co. uses a traditional allocation of overhead based on direct labor
hours system. The manager has accumulated the following information on engineering changes, which are indirect cost of their products, for two of the company's major products:
($400 * 5) + ($400 * 25) = $12,000 total cost of engineering changes
(4 * 5,000) + (4 * 2,500) = 30,000 direct labor hours
$12,000/30,000 hours = $0.40 per direct labor hour
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