Reference no: EM132639422

A firm produces and sells two products, Alpha and Zeta. The following information is available relating to setup costs (a part of factory overhead):

                                                 Product Alpha                  Product Zeta

Units produced..................... 900                            900
Number of setups............... 90                                 10
Direct labor hours per unit 1/3                                  1/3
Total direct labor hours 300                                      300
Cost per setup $250
Total setup cost $25,000

Question a.) With traditional allocation of setup overhead, using direct labor hours as the allocation base (driver), what is the setup cost allocated to each unit of Product Alpha produced is (rounded to nearest cent)?

Question b.) With traditional allocation of setup overhead, using direct labor hours as the allocation base (driver), what is the setup cost allocated to each unit of Product Zeta produced is (rounded to nearest cent)?

Question c.) Use of activity-based costing would allocate the following amounts of setup cost to each unit of Product Alpha (rounded to nearest cent):

Question d.) Use of activity-based costing would allocate the following amounts of setup cost to each unit of Product Zeta (rounded to nearest cent):