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

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

 PlusMax

Units produced20016,000Batch size (units)10400Number of setups2040Direct labor hours per unit55Total direct labor hours1,00080,000Cost per setup$1,080 Total setup cost$64,800 

With traditional two-stage allocation of overhead costs, using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated to each unit of product for Plus and Max, respectively is:

a. $.80; $.80.

b. $3.20; $3.20.

c. $4.00; $4.00.

d. $160.00; $12,800.00.

e. $200.00; $16,000.00.