Kutools Calibri 11 A A = Paste X Cut [ Copy Format Painter Clipboard BIU G A 2. Wrap Text Merge & Cent V Font Alignment C10 > A B D H X X X Part 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. What is the gross profit per unit? 4 Refer to Exhibit 17.2 on page 766 6 The first thing you need to calculate is the total number of direct labor hours required. 7 8 Units DUH/Unit DL Required 9 Product A 10 Product B 11 (denominator 12 Total DUH below!) 13 14 15 The second step is to calculate the total manufacturing overhead to be allocated 16 (Since this is manufacturing overhead, don't include nonmanufacturing overheadt) 17 18 Engineering Support 19 Electricity 20 Setup Costs 21 22 Total Manufacturing Overhead (numerator below!) 23 24 25 the third step is to calculate the plantwide overhead tate for allocation 26 27 28 Plantwide Overhead Rate 29 30 31 32 33 34 35 Plantwide overhead rate Total overhead Direct labour Hours O / DLH Problem 171 Problem 17.3 Enter EF A B 1111 E G . 1 2 Part 1. Compute the manufacturing cost per unit using the plantwide overhead rate 3 based on direct labor hours. What is the gross profit per unit? 4 Refer to Exhibit 17.2 on page 766 5 6 The first thing you need to calculate is the total number of direct labor hours required. 7 8 # Units DLH/Unit DLH Required 9 Product A 10 Product B o 11 12 Total DLH (denominator below!) 13 14 15 The second step is to calculate the total manufacturing overhead to be allocated. 16 (Since this is manufacturing overhead, don't include nonmanufacturing overhead!) 17 18 Engineering Support 19 Electricity 20 Setup Costs 21 22 Total Manufacturing Overhead (numerator below!) 23 24 25 The third step is to calculate the plantwide overhead rate for allocation. 26 27 28 Plantwide Overhead Rate 29 30 Plantwide Total overhead 32 overhead rate 33 Direct labour Hours 34 35 36 / DLH 31 Problem 17-1A Problem 17-3A Enter AutoSave Off pg BBBAC17346641459891A3D2A549AEC772) - Excel File Home Insert Draw Search Page Layout Formulas Data Review View Help X cut Copy Calibri A A 14 BIU 5 . Clipboard $ % Font Alignment C9 X Nume D C Plantwide overhead rate G Total overhead Direct labour Hours 31 32 33 34 35 36 37 38 39 40 / DLH Enter this plantwide overhead rate below in the fourth step! 42 43 44 45 46 47 48 Part 1 (Continued) 49 50 The fourth step is to calculate the total manufacturing cost per unit for each product. 51 (Remember, total mfg. cost includes direct materials, direct labor, and mig, overhead) 52 53 Product A Product B 54 55 Direct Materials per unit 56 57 Direct Labor per unit 58 A: 0.3 DLH/unit @ $20/DLH 59 B: 1.6 DLH/unit @ $20/DUH 60 61 Manufacturing Overhead per unit 62 A: 0.3 DLH/unit /DLH 63 B: 1.6 DLH/unit /DLH 64 65 Total Manufacturing Cost per unit 66 Problem 17-1A Problem 17-3A Enter Type here to search of File Home Insert Draw Search Page Layout Formulas Data Review View Help X Cut Copy Calibri 11 CAA A BIU. si EE Berge Center Clipboard $ % 9 Font Alignment C9 Number D F 67 68 The last step is to calculate the gross profit per unit. 69 (Remember, gross profit is Sales - Manufacturing Cost) 70 71 Product A Product B 72 73 Selling Price per unit 74 75 Manufacturing Cost per unit 76 77 Gross profit margin per unit 78 79 81 82 Enter this gross profit margin per unit below in Part 21 83 84 85 86 87 88 89 90 91 92 93 94 Part 2. How much gross profit is generated by each customer using the plantwide overhead rate? 95 96 Product A Product 97 98 Gross Profit Margin per unit 99 100 Units Purchased per Customer 101 A: 10,000 units / 500 customers 102 B: 2,000 units/400 customers Problem 17-1A Problem 17-3A Enter Type here to search X O Excel File Home Search Insert Draw Page Layout Formulas Data Review View Help X Cut ID Copy Calibri 11 AA Fonte BIU A W Clipboard 15 Font Alignment 09 Nu X X B G 92 93 94 Part 2. How much gross profit is generated by each customer using the plantwide overhead rate? 95 96 Product A Product B 97 98 Gross Profit Margin per unit 99 100 Units Purchased per Customer 101 A: 10,000 units/500 customers 102 B: 2,000 units / 400 customers 103 104 Gross Profit Margin per Customer 105 106 107 What is the cost of providing customer service to each customer? 108 109 Total Customer Service Cost 1101 111 Total Number of Customers (A+B) 112 113 Customer Service Cost per Customer 114 1151 116 What information is provided by this comparison of Cust. Service Cost to profit Margin? 117 118 Gross Profit Margin per Customer 119 120 Customer Service Cost per Customer 121 122 Profit (Loss) per Customer 123 124 125 126 127 Problem 17-1A Problem 17-3A Enter Type here to search AutoSave ON 2 D BBBAC17346641459891A3D2A-49AEC77 (2) - Excel File Home Search Insert Draw Page Layout Formulas Data Review View X Cut Help Calibri 11 In Copy Paste - AA A- 29 Wapet General BIU Clipboard Font Alignment C9 NL 143 145 A B D E G 138 H 139 740 Part 3. Determine the manufacturing cost per unit of each product line using ABC 141 What is the gross profit per unit? 142 Remember, when using ABC, we are using multiple cost drivers! 144 We only used direct labor hours in Part 1, since we were using a plantwide overhead rate! For ABC, we can use different drivers for each overhead cost pool. 146 147 148 The first step is to calculate the cost per activity (allocation rates) for each of the cost pools. 149) 150 Engineering Support would be the Total Cost / Total Number of Modifications (A + B) 151 152 / Modification 154 155 156 Electricity would be the Total Cost / Total Number of Machine Hours (A. 8) 157 A: 10,000 units @ 0.1 machine hours / unit 158 B: 2,000 units @ 1.2 machine hours / unit 159 160 Total Number of Machine Hours 161 162 163 /MH 153 164 Setups would be the Total Cost / Total Number of Batches (A+B) 165 166 167 168 169 170 171 172 173 / Batch Problem 17-1A Problem 17-3A Enter BCopy A 1 Wap Test BIU. For Paletter Clipboard $ % Font Alignment Num B E F G 4 Enter these overhead allocation rates below in the second step! 5 6 7 78 29 30 31 32 33 B4 B5 86 Part 3. (Continued) 87 88 The second step is to determine the total mfg. cost per unit of each product line using ABC. 89 90 Allocation 91 Rates Product A Product B 92 93 Engineering Support 94 A: 12 modifications 195 B: 58 modifications @ 196 297 Electricity 198 A: 1,000 machine hours @ 199 B: 2,400 machine hours 200 201 Setups 202 A: 125 batches 203 B: 225 butches 204 205 Total Overhead Cost by Product Line 206 207 Number of Units 10,000 2.000 Problem 17-1A Problem 17-3A Enter Type here to search AutoSave BBBAC173A6641459891A3D2AF49AEC77 (2) - Excel File Home Insert Draw Search Page Layout Formulas Data X cut Review View Help Calibri Paste CaCopy BIU General w A B Cantero Alignment Clipboard $ % 12 Font C9 X Nur 06 B C D E G H 07 Number of Units 10,000 08 2.000 09 Overhead Cost per Unit (rounded to 2 decimal places) 10 11 Direct Materials Cost per unit 12 13 Direct Labor Cost per unit (Part 1, step 4) 14 15 Total Manufacturing Cost per unit 16 171 18 The last step is to calculate the gross profit per unit using ABC. 19 201 Product A Products 21 22 Selling Price per unit 23 24 Total Manufacturing Cost per unit (step 2) 25 26 Gross Profit per unit 27 28 29 30 31 32 Part 4. How much gross profit is generated by each customer using Activity-Based Costing? 33 34 Product A Product B 35 36 Gross Profit per unit 37 38 Units Purchased per Customer 39 A: 10,000 units / 500 customers 40 B: 2,000 units / 400 customers -41 Problem 17-1A Problem 17-3A Enter AutoSave Olt 2. BBBAC173A6641459891A3D2A49AEC772) - Excel File Home Insert Draw Search Page Layout Formulas Data Review View Help Calibri 11 - A A X Cut Lycopy amat Painter Clipboard BIU General SINI A- 19 > El Corte $ % F Font 09 Alignment X Number X A B D F 231 G H 232 Part 4. How much gross profit is generated by each customer using Activity-Based Costing? 233 234 Product A 235 Product B 236 Gross Profit per unit 2371 238 Units Purchased per Customer 239 A: 10,000 units / 500 customers 240 B: 2,000 units / 400 customers 241 242 Gross Profit per Customer 243 244 245 Is the gross profit per customer adequate? 246 247 Gross Profit per Customer 248 249 Customer Service Cost per Customer (Part 2) 250 251 Profit (Loss) per Customer 252 253 254 Part 5. Which method of product costing gives better information to managers of this company? 255 256 You don't have to answer this question. This problem should help you to understand 257 that the ABC method (using multiple overhead rates based on different cost drivers) 258 can provide better information for decision making than using a plantwide overhead 259 rate based on only one cost driver (usually Direct Labor Hours or Direct Labor Cost) 260 261 In this problem, the plantwide overhead method would sugest that Product A is 262 unprofitable and should be dropped! The ANC method shows that a more accurate 263 allocation of overhead costs can help managers make better decisions! 264 265 266 Problem 17-1A Problem 17,3A En Type here to search o B H 1111 E G 1 . 2 Part 1. Compute the manufacturing cost per unit using the plantwide overhead rate 3 based on direct labor hours. What is the gross profit per unit? 4 Refer to Exhibit 17.2 on page 766 5 6 The first thing you need to calculate is the total number of direct labor hours required. 7 8 # Units DLH/Unit DLH Required 9 Product A 10 Product B O 11 (denominator 12 Total DLH below!) 13 14 15 The second step is to calculate the total manufacturing overhead to be allocated. 16 (Since this is manufacturing overhead, don't include nonmanufacturing overhead!) 17 18 Engineering Support 19 Electricity 20 Setup Costs 21 22 Total Manufacturing Overhead (numerator below!) 23 24 25 The third step is to calculate the plantwide overhead rate for allocation. 26 27 Plantwide Overhead Rate 29 30 Plantwide Total overhead 32 overhead rate 33 Direct labour Hours 34 35 36 / DLH 28 31 Problem 17-1A Problem 17-3A Enter mconnect The following data are for the two products produced by Tadros Company. Product A PROBLEM Problem 17 Comparing cos ABC with the pl overhead rate P1 P3 A1 DECE Dructibor hours Macho Baschet Volume Engeng mode Number of customers Market price SI5 port Q DUH 0.1 MH perut 125 buche 10.000 units 12 modifications 500 ot.com 50 per unit 524 per 16 DUH per 1.2 MH per unit 235 batches 2.000 units 58 modifications 400 customers 5120 per unit The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing Engineering support Electricity Setup costs Nonmanufacturing Customer service 524500 34.000 52.500 Engineering modifications Machine hours Batches 81.000 Number of customers Check 526 37 por Required 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. What is the gross profit per unit? 2. How much gross profit is generated by each customer of Product A using the plantwide overhead rate? How much gross profit is generated by each customer of Product B using the plantwide overhead rate? What is the cost of providing customer service to each customer? What information is provided by this comparison? 3. Determine the manufacturing cost per unit of each product line using ABC. What is the gross profit per unit? 4. How much gross profit is generated by each customer of Product A using ABC? How much gross profit is generated by each customer of Product B using ABC? Is the gross profit per customer adequate? 5. Which method of product costing gives better information to managers of this company? Explain why $24 30 p