Question
A company has the following data for two products:
Product A requires 200 machine hours and 50 setups; Product B requires 400 machine hours and 10 setups. If setup cost per unit is ₹500 and machine hour cost is ₹100, calculate total cost allocated for each product.Solution
A = (200×100)+(50×500)=20,000+25,000=₹45,000; B = (400×100)+(10×500)=40,000+5,000=₹45,000 (corrected to equal allocation)
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