Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following data are for the two products produced by Tadros Company. Product A Product B Direct materials $ 15 per unit $ 25 per
The following data are for the two products produced by Tadros Company.
Product A
Product B
Direct materials
$
15 per unit
$
25 per unit
Direct labor hours
0.5 DLH per unit
1.5 DLH per unit
Machine hours
0.4 MH per unit
1.2 MH per unit
Batches
200 batches
360 batches
Volume
16,000 units
3,600 units
Engineering modifications
18 modifications
82 modifications
Number of customers
800 customers
720 customers
Market price
$
60 per unit
$
240 per unit
The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows.
Costs
Driver
Indirect manufacturing
Engineering support
$
53,600
Engineering modifications
Electricity
42,880
Machine hours
Setup costs
171,520
Batches
Nonmanufacturing
Customer service
136,800
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 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?
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
Electricity
Setup
Overhead Assigned
Activity Driver
Activity rate
Total Overhead Cost
Product A
Engineering support
Electricity
Setup
Product B
Engineering support
Electricity
Setup
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
(31.03)
(102.64)
4.1 How much gross profit is generated by each customer of Product A and Product B using ABC?
Product A
Product B
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?
Method of product costing for better information
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Management and Cost Accounting
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
6th edition
1292063467, 978-1292063461
