Performance Bicycle Company makes steel and titanium handle bars for bicycles. It requires approximately 1 hour of labor to make one handle bar of either type. During the most recent accounting period, Barr Company made 7,000 steel bars and 3,000 titanium bars. Setup costs amounted to $84,000. One batch of each type of bar was run each month. If a single company-wide overhead rate based on direct labor hours is used to allocate overhead costs to the two products, the amount of setup cost assigned to the steel bars will be:

Explanation:

Particulars    Steel BarsTitanium Bars

Units Per Batch70003000

Hours Per Unit   1         1

Total Hours         70003000

Overhead rate on the basis of direct labor = Total Overhead / Total labor hours  = 84,000/10,000 i.e 8.40

Overhead cost allocated to steel bars = 8.40*7000 = 58,800

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urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total