Reed Company Reed Company Produces 50,000 Units of Product Q and 6,000

Multiple Choice

Reed Company
Reed 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 Reed Company.Assume that Reed Company has decided to allocate overhead costs using levels of cost drivers.What would be the approximate per-unit set-up cost for the blue units of Product Z?

A) $.04.
B) $.25.
C) $.50.
D) None of the responses are correct.