Problem 17-1A Comparing costs using ABC with the plantwide overhead rate LO P1, P3, A1, A2 The following data are for the two products produced by Tadros Company. Product A Product B Direct materials $ 14 per unit $26 per unit Direct labor hours 0.6 DLH per unit 1.6 DLH per unit Machine hours 0.5 MH per unit 1.2 MH per unit Batches 100 batches 200 batches Volume 10,000 units 2,000 units Engineering modifications 10 modifications 50 modifications Number of customers 500 customers 400 customers Market price $36 per unit $ 95 per unit The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing Engineering support $ 25,000 Engineering modifications Electricity 37.000 Machine hours Setup costs 43,000 Batches Nonmanufacturing Customer service 73,000 Number of customers Required: (Round your per unit cost answers to 2 decimal places and other answers to nearest whole number. Loss amounts should be indicated with minus sign.) 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs $ 105.000 $ 11.41 per direct labor hour Direct labor hours 9,200 Overhead Assigned Activity OH Cost per Plantwide OH rate Total Overhead Cost Units Produced Driver unit Product A 6,000 Product B 3,200 Product A Product B 12 What is the gross profit per unit? Product A Product B Market price Gross profit per unit 2.1 How much gross profit is generated by each customer of Product A and Product B using the plantwide overhead rate? Product A Product B Gross profit per unit Units purchased per customer Gross profit por customer 2.2 What is the cost of providing customer service to each customer? is the gross profit adequate for each customer of Product A and B using the plantwide overhead rato? Product A Product B Gross profit per customer Customer service cost per customer Profit (loss) per customer Is the profit adequate? 3.1 Determine the manufacturing cost per unit of each product line using ABC. Engineering Support 0 Electricity of Setup Activity Driver Activity rate Total Overhead Cost Overhead Assigned Product A Engineering support Electricity Setup $ 0 Product B Engineering support Electricity Setup $ Product A Product B Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead por unit Total manufacturing cost per unit 3.2 What is the gross profit per unit? Product A Products Market price (30.35) (88.75) 1 How much as it is generated by each customer of Product A and Product Busing ABC? 3.2 What is the gross profit per unit? Product A Product B Market price (30.35) (88.75) 4.1 How much gross profit is generated by each customer of Product A and Product Busing ABC? Product A Product B 0 Units purchased per customer Gross profit (los) per customer 4.2 is the gross profit adequate for each customer of Product A and B using ABC? Product A Product B Gross profit (050) per customer Customer service cost per customer Profit (los) per customer Is the profit adequate using ABC? 5. Which method of product costing gives better information to managers of this company? O Plantwide overhead rate method Activity-based costing method Departmental overhead rate method
