Question 1: Cost allocation
Product A
Product B
Total
sales volume (units)
270
150
420
Revenue
$6,000
$36,000
$42,000
Variable costs:
direct materials
$1,200
$2,400
$3,600
direct labor
$2,400
$6,000
$8,400
Contribution margin
$2,400
$27,600
$30,000
Fixed costs
$25,200
Profit
$4,800
a) Allocate the fixed costs between products A and B. Use
direct labor dollars as the cost driver.
allocation rate=$ per DL$
allocated costs for A=$
allocated costs for B=$
b) Compute the profit margins for products A and
B:...