5

Item 5

Item 5 2 points

Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places.)

	Product A	Product B
Number of units produced	12,500 units	1,700 units
Direct labor cost (@ $27 per DLH)	0.16 DLH per unit	0.24 DLH per unit
Direct materials cost	$ 1.90 per unit	$ 2.70 per unit

Activity	Overhead costs
Machine setup		$	112,548
Materials handling			59,000
Quality control inspections			59,620
		$	231,168

Required: 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. Direct materials Direct labor costs Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Product A Product B Product A Product B 2. If the market price for Product A is $27.82 and the market price for Product B is $61, determine the profit or loss per unit for each product Product A Product B Market price 3. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? Product A Product B Number of setups required for production 11 setups setups Number of parts required part/unit part/unit Inspection hours required 56 hours 215 hours Machine setup Materials handling Materials handling Quality control Product B Machine setup Materials handling Quality control Product Product B Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 4. Determine the profit or loss per unit for each product assuming ABC costing. Product Product B Market price 4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy? Yes O No