Reference no: EM132560585

Assume that the direct cost per smartphone is:

Direct material $60
Direct labour $35

Assume that the factory where the phones are made is also used to make tablets and the annual costs of the factory (rent, insurance, maintenance etc) are $8 million.

Question 1 : How much of this $8 million cost should be allocated to each smartphone made?

The factory is expected to make 200,000 smartphones and 100,000 tablets in the year. It takes 2 hours to make a smartphone and 4 hours to make a tablet.

Select one:

Option 1: $15

Option 2: $20

Option 3: $40

Option 4: $10