Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 13 per unit $ 25 per unit
Direct labor hours 0.6 DLH per unit 1.5 DLH per unit
Machine hours 0.5 MH per unit 1.1 MH per unit
Batches 120 batches 240 batches
Volume 10,000 units 2,000 units
Engineering modifications 9 modifications 45 modifications
Number of customers 500 customers 400 customers
Market price $ 35 per unit $ 95 per unit per unit

The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows.

Costs Driver
Indirect manufacturing
Engineering support $ 27,000 Engineering modifications
Electricity 28,800 Machine hours
Setup costs 42,000 Batches
Nonmanufacturing
Customer service 74,000 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.) . Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs 0 Direct labor costs Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Product A Product B Product A Product B 1.2 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 per customer 2.2 What is the cost of providing customer service to each customer? 0 Is the gross profit adequate for each customer of Product A and B using the plantwide overhead rate? 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 0 Setup 0 Overhead Assigned Activity Driver Activity rate Total Overhead Cost Product A Engineering support Electricity Setup $0 Product B Engineering support Electricity Setup $0 Total manufacturing costs Product A Product B Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 3.2 What is the gross profit per unit? Product A Product B Market price (28.85) (84.65) 4.1 How much gross profit is generated by each customer of Product A and Product B using ABC? Product A Product B 0 Units purchased per customer Gross profit (loss) 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 (loss) per customer Customer service cost per customer Profit (loss) per customer Is the profit adequate using ABC?

5. Which method of product costing gives better information to managers of this company?

  • Plantwide overhead rate method

  • Activity-based costing method

  • Departmental overhead rate method

just like this question but different numbers

https://www.chegg.com/homework-help/questions-and-answers/problem-17-1a-comparing-costs-using-abc-plantwide-overhead-rate-lo-p1-p3-a1-a2-following-d-q27218892

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Costing

Authors: Terry Lucey

5th Edition

1858051657, 9781858051659

More Books

Students also viewed these Accounting questions