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#23 Trailers R Us​ Company, which uses an activityminus−based costing​ system, produces travel trailers and boat...

#23

Trailers R Us​ Company, which uses an

activityminus−based

costing​ system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic​ data:

Travel trailers

Boat trailers

Budgeted units to be produced

2,550

2,900

Budgeted number of setups

340

600

Budgeted number of direct labor hours per unit

40

80

Total budgeted setup costs for the year are

$ $158,400.

If the setup costs are allocated using number of​ setups, how much of the total setup costs would be allocated to boat​ trailers?

Business   Accounting   
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Answer #1

Total budgeted setup costs for the year = $158,400

Budgeted number of setups of Boat trailers = 600

Budgeted number of setups of Travel trailers = 340

Total Budgeted number of setups = Budgeted number of setups of Boat trailers + Budgeted number of setups of Travel trailers

= 600 + 340

= 940

Total setup costs allocated to boat​ trailers = Total budgeted setup costs for the year x Budgeted number of setups of Boat trailers/Total Budgeted number of setups

= 158,400 x 600/940

= $101,106 (rounded to whole dollar)

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