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Assume that the direct cost per phone is:
Direct material: $40
Direct labour: $25
Assume that the factory where the phones are made is also used to make tablets (e.g. i pads). The annual costs of the factory (rent, insurance, maintenance etc) are $10,000,000.
Problem 1: How much of this $10 million cost should be allocated to each phone made?
Allocate the joint costs of production to each product using the weighted average method. Now which product receives the largest portion of the joint costs
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