Sturdivant Fasteners, Co Compute the Cost Per Unit Using: the Traditional Two-Stage Allocation

question 166

Essay

Sturdivant Fasteners, Co. uses a traditional allocation of overhead based on direct labor hours system. The manager has accumulated the following information on engineering changes, which are indirect cost of their products, for two of the company's major products:
$$\begin{array} { l | l | l } & \begin{array} { l } \text { Autom otive } \\\text { Fasteners }\end{array} & \begin{array} { l } \text { Computer } \\\text { Fasteners }\end{array} \\\hline \text { Total units produced } & 5,000 & 2,500 \\\hline \text { Cost per engineering change } & \$ 400 & \$ 400 \\\hline \text { Number of engineering changes } & 5 & 25 \\\hline \text { Direct labor hours per unit } & 4 & 4\end{array}$$ Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.

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Definitions:

Brochure

A printed piece of marketing material that provides information about a product, service, or organization.

Sample

A specimen or part of something used to show the quality or nature of the whole.

Model

A representation, often simplified, used to describe or simulate a process, system, or concept to promote understanding or predict outcomes.

Waive Warranties

involves the voluntary act of relinquishing one's legal right to enforce warranty claims against a seller.