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 16,000 Batch size (units) 10 400 Number of setups 20 40 Direct labor hours per unit 5 5 Total direct labor hours 1,000 80,000 Cost per setup$1,080 Total setup cost$64,800 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:
A. $21.60; $.54.
B. $54.00; $27.00.
C. $108.00; $2.70.
D. $60.00; $60.00.
E. $200.00; $16,000.00
Answer: C
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