Production costs and allocation of costs have an implication on cost per unit. Two alternatives methods of production are being considered: Allocation basis using factory space and Allocation basis using labor. A. Allocation basis using factory space The first step is to determine the fixed cost per unit of Android01. Total fixed cost is $5,000,000. Android01 allocation is 30%. To get the fixed cost for Android01, total fixed cost is ($5,000,000) has been multiplied by 30%. The total fixed cost for Android01 is $1,500,000.00. The total fixed cost for Android01 is divided by the number of units (300) to arrive at fixed cost per unit of Android01 ($5000). The second step is to calculate the variable cost of Android01. Total variable cost of both Processor01 and Android01 is $20,000,000. The total factory space is 100000 sq ft. Android01 utilizes 30000 sq ft. hence; Android01 has been allocated 30% of the factory space (100000/30000). Total v...
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