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Allocation of Setup Cost

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Relating Cost Pools to Products Using Cost Drivers
Classy Attire is the designer and maker of elaborate prom dresses. The president of Classy wants to switch to an activity-based approach in the upcoming year to assign prices to the gowns. Production line setups are a major activity at Classy. Next year Classy expects to perform 1,200 setups at a total cost of $90,000. Classy plans to produce 370 dresses of the A128 design, which will require two setups. How much setup cost will be allocated to each dress of the A128 design that is produced? (Round answer to 2 decimal places.)

Setup cost per A128 dress $

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Solution Summary

The solution explains how to allocate setup costs to products.

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