Question

Oliver's Company (OC) produces batches of chicken and beef organic dog food. Each time OC switches production from chicken to beef it incurs set-up costs. It takes 180 set-ups to create the chicken dog food and 180 set-ups to create the beef dog food. Using activity based costing, there is an allocation rate of $20 per set-up. Based on activity based costing, what amount of set-up costs should be allocated to the chicken dog food

Answer 1

$3,600

Step-by-step explanation:

Calculation to determine what amount of set-up costs should be allocated to the chicken dog food

Using this formula

Set-up costs = Cost per each set up * Totals ups

Let plug in the formula

Set-up costs=$20 * 180

Set-up costs=$3,600

Therefore the amount of set-up costs that should be allocated to the chicken dog food is $3,600