Question - The production of Android01 will share some production facilities and service divisions with Processor01. Fixed costs are $5 million per year, and are to be assigned at the rate of 30 percent to Android01 and 70 percent to Processor01.
The variable cost of the production facilities and service divisions is $20 million per year. The square footage of factory space and labor needed for the production of 500 units of Processor01 and 300 units of Android01 are listed below:
Processor01 (500 units) 70,000 Square Feet 120 Labor
Android01 (300 units) 30,000 Square Fee 80 Labor
The remaining cost for the production of Android01 is for components, at $25,000 per unit.
Question: What would be the cost per unit of producing Android01 using factory space as the allocation basis? What would be the cost per unit using labor as the allocation basis?