Compute how much of setup costsallocated to superior model

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Reference no: EM132721345

Problem 1: Hammock Company manufactures two models of its hammock, the Superior and the Deluxe. The Superior model requires 10,000 direct labour hours and the Deluxe COMM 305 Tutorials - Matthew requires 40,000 direct labour hours. The company produces 4,000 units of the Superior model and 1,000 units of the Deluxe model each year. The company produces the Superior model in batch sizes of 200, while it produces the Deluxe model in batch sizes of 100. The company expects to incur $120,000 of total setup costs this year. How much of the setup costs are allocated to the Superior model using ABC costing?

a. $80,000
b. $60,000
c. $24,000
d. $100,000
e. None of the above

Reference no: EM132721345

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