#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?
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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