Solution-How much of dollar eight million cost should be

How much of dollar eight million cost should be allocated

Reference no: EM132809474

Assume that the direct cost per smartphone is:

Direct material $60

Direct labour $35

Assume that the factory where the phones are made is also used to make tablets and the annual costs of the factory (rent, insurance, maintenance etc) are $8 million. The factory is expected to make 200,000 smartphones and 100,000 tablets in the year. It takes 2 hours to make a smartphone and 4 hours to make a tablet.

Problem 1: How much of this $8 million cost should be allocated to each smartphone made?

Select one:

Option 1: $15

Option 2: $20

Option 3: $10

Option 4: $40

Reference no: EM132809474

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How much of dollar eight million cost should be allocated

Reference no: EM132809474

Reference no: EM132809474

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