Exercise 17-12 Using ABC for strategic decisions LO P1, P3 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.) Number of units produced Direct labor cost (@ $28 per DLH) Direct materials cost Product A 12,500 units 0.19 DLH per unit $ 2.40 per unit Product B 1,900 units 0.25 DLH per unit $ 2.90 per unit Activity Machine setup Materials handling Overhead costs $152,980 56,000 Quality control inspections 70,320 $279,300 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. Overhead Assigned Product A Product B Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Product A Product B 2. If the market price for Product A is $32.58 and the market price for Product B is $56, determine the profit or loss per unit for each product. Market price Product A Product B 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? Number of setups required for production Number of parts required Inspection hours required Product A Product B 2 setups 30 4. part/unit 11 setups part/unit 48 hours 245 hours Machine setup Materials handling Quality control Overhead Assigned Product A Machine setup Materials handling Quality control Product B Machine setup Materials handling Quality control Activity Driver Activity Rate Total Overhead Cost Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Product A Product B Total manufacturing cost per unit 4. Determine the profit or loss per unit for each product assuming ABC costing. Market price Product A Product B 4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy? No Yes