Stone Company Stone Company produces 50,000 units of Product Q and 6,000 units of Product Z during a period.In that period,four set-ups were required for color changes.All units of Product Q are black,which is the color in the process at the beginning of the period.A set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red units of Product Z; a set-up was made for 500 green units of Product Z.A set-up was then made to return the process to its standard black coloration and the units of Product Q were run.Each set-up costs $500.
Refer to Stone Company.Assume that Stone Company has decided to allocate overhead costs using levels of cost drivers.What would be the approximate per-unit set-up cost for the green units of Product Z?
A)$1.00.
B)$0.25.
C)$0.04.
D)None of the responses are correct.

Question

Quizplus · Accepted Answer

The total set-up cost is $500 per set-up, and there are four set-ups. The cost for the green units is $500 for 500 units, resulting in a per-unit cost of $1.00.

Stone Company Stone Company Produces 50,000 Units of Product Q