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25 June, 22:32

Smythe Co. makes furniture. The following data are taken from its production plans for the year.

Direct labor costs $5,680,000

Hazardous waste disposal costs 620,000

Chairs Tables

Expected production 207,000 units 21,000 units

Direct labor hours required 272,000 DLH 15,800 DLH

Hazardous waste disposed 400 pounds 400 pounds

Required:

Which method is better for assigning costs to each product?

i. Assignment based on the number of pounds

ii. Assignment based on direct labor hours

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Answers (1)
  1. 26 June, 02:03
    0
    ii

    Explanation:

    Number of pounds remain same whether the expected production id 207,000 or 21,000 units. Direct labor hours vary with expected units of production. So, assignement based on direct labor hours is better for assigning costs to eact product
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