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	11,500 units	1,200 units
Direct labor cost (@ $23 per DLH)	0.19 DLH per unit	0.25 DLH per unit
Direct materials cost	$ 1.90 per unit	$ 2.10 per unit

Activity	Overhead costs
Machine setup		$	109,310
Materials handling			58,000
Quality control inspections			71,250
		$	238,560

Required

4.2 Should this information influence company strategy?

• Yes

• No

1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. Overhead costs 96.00 per direct labor hour 238,560 $ Direct labor hours 2,485 OH Cost per unit Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced 96.00 $ Product A 2,185 209,760 110,400 1.90 96.00 $ 13,714 $ Product B 300 28,800 2.10 Total manufacturing cost per unit: Product A Product B Direct material cost per unit 1.90 S 2.10 5.75 Direct labor cost per unit 4.37 Overhead cost per unit 1.90 2.10 Total manufacturing cost 8.17 9.95 2. If the market price for Product A is $29.63 and the market price for Product B is $57, determine the profit or loss per unit for each product. Product A Product B 29.63 S Market price 57.00 Manufacturing cost per unit (8.17) (9.95) Profit(loss) per unit 21.46 47.05 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 Number of parts required Inspection hours required setups part/unit setups part/unit 6 26 16 8 60 hours 225 hours Machine setup Overhead costs 0 per setup Number of setups Materials handling Overhead costs 0 per part Number of parts Quality control Overhead costs 0 per inspection hour Inspection hours Total Overhead Cost Overhead Assigned Activity Driver Activity Rate Product A Machine setup Materials handling Quality control 0 Product B Machine setup Materials handling Quality control Total manufacturing costs Direct Materials per unit Product B Product A 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 A Product B Market price