Is the net of the Total Profit per Unit using POHR (Part 1) a profit Is the net of the Total Profit per Unit using ABC (Part 3) a profit or a loss? For Part 271, did the Overhead Per Unit increase or decrease, and by how much, from using or a loss? POHR to ABC? For Part 342, did the Overhead Per Unit increase or decrease, and by how much, from using POHR to ABC? Is there a scenario where on a one-to-one basis, the overall per unit Total Profit is actually a profit and not a loss? What kind of price increase per unit does it take to make Part 342 profitable? What recommendation would you make to the client if you were the presenting partner? Part 1: Compute overhead and gross margin using traditional costing. Per unit Part 271 Part 342 Selling Price $31.86 $24.00 Product Cost Prime costs $9.53 $8.26 Overhead $12.83 $5.77 Total Product Cost $22.36 $14.03 $9.97 Total Profit $9.50 Part 2: Select the best cost driver and compute overhead rates for each cost pool. Overhead Rate Cost Pool Cost Driver $800,00 Setup costs Material handling costs Production runs per Ra Material moves $1,000.00 per More Machine costs $9.46 Machine hours per MH Receiving costs Engineering General plant costs $1,500.00 $150.00 per Order per EH per DLH Receiving orders Engineering hours costs $1.83 Direct labor hours Part 3: Compute overhead and gross margin using Activity-based costing. Part 271 Per unit Part 342 Selling Price $24.00 $31.86 Product Cost Prime costs $9.53 $8.26 Overhead $7.14 $34.19 Total Product Cost $16.67 $42.45 Total Profit $15.19 (S18.45) Part 4: Recommendations Increase in price for Part 342 by 25 % Per unit Part 271 Part 342 Selling Price $31.86 $30.00 Product Cost Prime costs $9.53 $8.26 $7.14 Overhead $34.19 Total Product Cost $16.67 $42.45 Total Profit ($12.45) $15.19 Part 5: Recommendations - Prime Cost for both decreases $1.50, Selling Price Part 271 reduced 25% Per unit Part 271 Part 342 Selling Price $23.90 $24.00 Product Cost Prime costs $8.03 $6.76 $34.19 Overhead $7.14 Total Product Cost $15.17 $40.95 Total Profit $8.72 ($16.95) Part 6: Recommendations - VARIED BASED ON YOUR SUGGESTED SCENERIO Per unit Selling Price Part 271 Part 342 $0.00 S0.00 Product Cost Prime costs $0.00 $0.00 Overhead $0.00 $0.00 $0.00 $0.00 Total Product Cost $.00 $0.00 Total Profit GIVEN INFORMATION Part 271 Part 342 Production 500,000 100,000 Selling Price Prime costs per unit Number of production runs Receiving orders $31.86 $24.00 $9.53 $8.26 200 100 400 1,000 Machine hours 125,000 60,000 250,000 Direct labor hours 22,500 Engineering hours 5,000 5,000 Material moves 500 400 0.5 Time to produce 1 unit (bour) 0.225 Overhead Cost Pools Setup costs Material handling costs $240,000 $900,000 $1,750,000 $2,100,000 $1,500,000 Machine costs Receiving costs Engineering costs General plant costs $500,000 $6,990,000 Total POHR $25.65 ABC Orerbead (DLH for General) Part 271 Part 342 $160,000 $80,000 $500,000 Setup costs Material handling costs C $400,000 Machine costs $1,182,432 $567,568 Receiving costs Engineering costs General plant costs $600,000 $1,500,000 $750,000 $750,000 $458,716 $41,284 $3,571,148 $3,418,852 Direct labor hours Overhead Rate per Part $7.14 $34.19