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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

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 11,000 units 1,300 units
Direct labor cost (@ $25 per DLH) 0.20 DLH per unit 0.28 DLH per unit
Direct materials cost $ 1.60 per unit $ 3.10 per unit

Activity Overhead costs
Machine setup $ 87,558
Materials handling 53,000
Quality control inspections 108,150
$ 248,708

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X Answer is complete but not entirely correct. 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. per direct labor Overhead costs 248,708 97.00 hour Direct labor hours Overhead Assigned 2,564 Activity Driver 2,200 Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Product A 97.00 11,000 19.40 213,400 35,308 Product B 364 $ 97.00 $ 1,300 27.16 Product A Product B $ 1.60 $ 3.10 Total manufacturing cost per unit: Direct material cost per unit Direct labor cost per unit Overhead cost per unit Total manufacturing cost 5.00 7.00 19.40 27.16 $ 26.00 $ 37.26 2. If the market price for Product A is $32.24 and the market price for Product B is $60, determine the profit or loss per unit for each product. Product A Product B Market price $ 32.24 $ 60.00 Manufacturing cost per unit (26.00) (37.26) Profit(loss) per unit $ 6.24 $ 22.74 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 8 setups 32 setups Number of parts required 20 part/unit 12 part/unit Inspection hours required 54 hours 255 hours Machine setup Overhead costs $ 87,558 $ 2,188.95 per setup Number of setups 40 53,000 1,656.25 per part Materials handling Overhead costs Number of parts Quality control 32 x Overhead costs $ 108,150 350.00 per inspection hour Inspection hours 309 Overhead Assigned Activity Driver Activity Rate Total Overhead Cost Product A 8 setups 2,188.95 $ Machine setup Materials handling 17,512 33,125 20 X parts per setup per part per inspection hour 1,656.25 X Quality control 54 inspection hours 350.00 18,900 Total overhead costs assigned Total units produced Overhead cost per unit 69,537 69,537 X 6.32 X Product B $ $ 70,046 Machine setup Materials handling 32 setups 12 X parts 2,188.95 1,656.25 per setup per part per inspection hour 19,875 Quality control 255 inspection hours 350.00 89,250 $ 179,171 179,171 X Total overhead costs assigned Total units produced Overhead cost per unit Total manufacturing costs Direct Materials per unit $ 137.82 Product A Product B 1.60 3.10 Direct Labor per unit 5.00 7.00 Overhead per unit 6.32 X 137.82 X 4. Determine the profit or loss per unit for each product assuming ABC costing. Product A Product B Market price $ 32.24 60.00 Manufacturing cost per unit Profit(loss) per unit (12.92) 19.32 X $ (147.92) (87.92) $ 4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy? Yes No

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