Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
Chapter5: Process Costing
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Transcribed Image Text:Hoger Corporation accumulated the following cost information for its two products, A and B:
A
B
Total Production volume
2,000
1,000
Total direct man. labor hrs.
5,000
20,000
Setup cost per batch
$1,000
$2,000
Batch size
100
50
Total setup costs incurred
$20,000
DMLH per unit
2
$40,000
1
A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system
would trace costs by spreading the costs per batch over the units in a batch.
What is the setup cost per unit of product A under each costing system?
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