2. Ethel Company produces 50,000 units of Product A and 6.000 units of Product B during a period. In that period, four set-ups were required for color changes. All units of Product A are black, which is the color in the process at the beginning of the period. A set-up was made for 1,000 blue units of Product B; a set-up was made for 4,500 red units of Product B; a set-up was made for 500 green units of Product B. A set-up was then made to return the process to its standard black coloration and the units of product A were run. Each set up costs P500. Assume that Ethel Company has decided to allocate overhead costs using levels of cost drivers. What would be the approximate per unit set-up cost for the green units of Product 0.036

2. Ethel Company produces 50,000 units of Product A and 6.000 units of Product B during a period. In that period, four set-ups were required for color changes. All units of Product A are black, which is the color in the process at the beginning of the period. A set-up was made for 1,000 blue units of Product B; a set-up was made for 4,500 red units of Product B; a set-up was made for 500 green units of Product B. A set-up was then made to return the process to its standard black coloration and the units of product A were run. Each set up costs P500. Assume that Ethel Company has decided to allocate overhead costs using levels of cost drivers. What would be the approximate per unit set-up cost for the green units of Product 0.036

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ethel Company produces 50,000 units of Product A and 6,000 units of Product B during a period. In that period, four set-ups were required for color changes. All units of Product A are black, which is the color in the process at the beginning of the period. A set-up was made for 1,000 blue units of Product B; a set-up was made for 4,500 red units of Product B; a set-up was made for 500 green units of Product B. A set-up was then made to return the process to its standard black coloration and the units of product A were run. Each set up costs $500. a. Assume that Ethel Company has decided to allocate overhead costs using levels of cost drivers. What would be the approximate per unit set-up cost for the green units of Product? b. If set-up cost is assigned on a volume basis for the department, what is the approximate per unit set up cost for Product B?
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