Answer:
Apportioned set-up cost
Plus =$21,600
Max=$43,200
Explanation:
Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.
<em>Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers. </em>
<em>The cost driver in this scenario is the number of set-ups</em>
Activity rate per driver is calculated as:
Activity overhead for the period / Total cost drivers for the period
So, we can apply this formula to the scenario above:
Set-up overhead= $64,800
Total set-ups for the period = 20 + 40 = 60
Overhead cost per set-up = $64,800/60=1,080
Set-up cost allocation:
Plus - 20 × 1,080=$21,600
Max- 40 × 1,080=$43,200
Apportioned set-up cost
Plus =$21,600
Max-=$43,200
