Asternik Company Produces and Sells Two Products, Alpha and Zeta

Multiple Choice

asternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: $\begin{array}{lrr} & \text { Alpha } & \text { Zeta } \\\text { Units produced } & 250 & 20,000 \\\text { Batch size (units) } & 10 & 500 \\\text { Total direct labor hours } & 1,000 & 39,000 \\\text { Cost per setup } & \$ 2,000 & \$ 2,000\end{array}$ Assume the cost per setup remains at $2,000 but that the batch size for product Alpha is changed from 10 to 25 units per batch.Using activity-based and a volume-based overhead costing that uses direct labor-hours to assign overhead, the amount of setup cost applied to each unit of product Alpha would be (rounded to the nearest cent) :

A) Option A
B) Option B
C) Option C
D) Option D
E) None of the above answers is correct