The following data are for the two products produced by Tadros Company.
| | Product A | | Product B |
| Direct materials | $ | 20 per unit | | $ | 30 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 | | 14 modifications | | | 86 modifications |
| Number of customers | | 800 customers | | | 720 customers |
| Market price | $ | 55 per unit | | $ | 220 per unit |
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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 | | 53,600 | | Machine hours |
| Setup costs | | 160,800 | | Batches |
| Nonmanufacturing | | | | |
| Customer service | | 129,200 | | Number of customers |
| |
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.)
Answer is not complete. 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs 268.000 20.00 per direct labor dollar Direct labor hours 13,400 Overhead Assigned Activity Driver Plantwide OH Total Overhead Cost Units Produced rate Product A 8,000 $ 20.00 $ 160.000 16,000 Product B 5.400 $ 20.00 S 108,000 3,600 OH Cost per unit S 10.00 S 30.00 Product A $ S Total manufacturing cost per unit: Direct material cost per unit Direct labor cost per unit Overhead cost per unit Total manufacturing cost 20.00 10.00 Product B 30.00 30.00 10.00 30.00 $ 40.00 $ 90.00 1.2 What is the gross profit per unit? $ $ Market price Manufacturing cost per unit Gross profit per unit Product A 55.00 (40.00) 15.00 Product B 220.00 (90.00) 130.00 5 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 $ 15.00 $ 130.00 Units purchased per customer 20 Gross profit per customer 15.00 130.00 2.2 What is the cost of providing customer service to each customer? Customer service costs 129.2008 85.00 per customer Number of customers 1,520 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 $ 15.00 $ 130.00 Customer service cost per customer 20.00 5.00 Profit (loss) per customer S 300.00 650,00 Is the profit adequate? Yes Yes 3.1 Determine the manutacturing cost per unit of each product line using ABC. Engineering Support Inspection hours XS S 536.00 per modification Number of modifications 100 Electricity Overhead costs s 24.800 XS 2.87 per machine hour Number of machine hours 8,640 >> Setup IS $ 160.800 560 >S Overhead costs Number of batches 287.14 per batch Overhead Assigned Activity Driver Activity rate Total Overhead Cost 14 modifications S Product A Engineering support Electricity Setup 6,400 machine hours S 536.00 per modification 2.87 X per machine hour per batch > 200 batches s 287.14 s 0 Product B Engineering support 86 modifications S 536.00 $ 46,096 Electricity 4,320 machine hours $ 2.87 per modification per machine hour per batch 12,398 360 batches $ 287.14 103,370 Setup Total overhead costs assigned Total units produced $ 161,864 Product A Product B 30.00 s s Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 20.00 10.00 30.00 0.00 0.00 Product B $ > $ S $ 112.48 3.2 What is the gross profit per unit? Product A Market price 55.00 $ 220.00 Manufacturing cost per unit (36.06) (107 52) Gross profit(loss) per unit 18.94 $ 112.48 4.1 How much gross profit is generated by each customer of Product A and Product Busing ABC? Product A Product B Gross profit(loss) per unit 18.94 Units purchased per customer 20 5 Gross profit (loss) per customer 378.80 562.40 4.2 Is the gross profit adequate for each customer of Product A and B using ABC? Product A Gross profit (boss) per customer 378.80 562.40 Customer service cost per customer 80.00 X 80.00 Profit (loss) per customer S 298.80 $ 482.40 Is the profit adequate using ABC? Yes Yes 5. Which method of product costing gives better information to managers of this company? Method of product costing for better information Activity-based costing method S Product B $ S
