Question 174152
B - $24,000 - Since there are 24 activities (set-ups) and since time is not given so we can assume it takes the same amount of time to do each set-up, each set-up costs $2,000. Since each type of production (steel and titanium) has 12 set-up, $2,000 time 12 = $24,000.

Under unit based accounting, which is what most companies still do, the titanium cost would have been $9,600 (20% of the total set-up cost, since 20% or output was titanium handle bars). This of course would have been overcharging steel handle bar production since since in reality, half the costs should be allocated to the 1/2 the set-ups for titanium handle bars.