5 Problem 17-1A Comparing costs using ABC with the plantwide overhead rate LO P1
ID: 2338878 • Letter: 5
Question
5 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. points Product $14 per unit roduct Direct materials Direct labor hours $25 per unit Machine hours Batches Volune Engineering modifications9 modifications5 Number of custcmers 0.4 DLH per unit 19 DLH per unit 0.3 MI per unit 115 batches 10,000 units 1.0 HH per unit 230 batches 2,000 units 45 modifications 400 customers 95 per unit per unit 500 cuastomera eBook Market price 935 pes unit Print The company's direct labor rate is $20 per direct labor hour (DLH) Additional information follows Indireet manufacturing References Engineering support Electricity Setup costs $26, 500 Engineering modsfications 25,000 Machine hours 13,000 Batches Nonmanufacturing Customer service 70,000 Number of euntomer 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.)Explanation / Answer
Solution:
1) Compute the manufacturing cost per unit using the plant-wide overhead rate based on direct labor hours
Manufacturing Overhead Costs (Refer calculation)
$94,500
$13.90
per direct labor hour
Direct labor hours (Refer calculation)
6,800
Overhead Assigned
Activity Driver (Refer Note 2)
Plantwide OH Rate
Total Overhead Cost
Unit Produced
OH Cost per unit
(A)
(B)
(O=A*B)
(P)
(O/P)
Product A
4000 DLHs
$13.90
$55,600
10,000
$5.56
Product B
2,800 DLHs
$13.90
$38,920
2,000
$19.46
Product A
Product B
Direct materials
$14.00
$25.00
Direct Labors
$8.00
$28.00
Applied Manufacturing Overhead
$5.56
$19.46
Total Manufacturing Costs
$27.56
$72.46
1.2 Gross Profit Per Unit
Product A
Product B
Market Price
$35
$95
Manufacturing Cost per unit (Refer Part 1)
$27.56
$72.46
Gross Profit per unit
$7.44
$22.54
2.1 Gross Profit generated by each customer
Product A
Product B
Gross Profit per unit
$7.44
$22.54
Units purchased per customer
(Product A 10,000 Units / 500 Customer and Product B 2,000 / 400 Customer)
20
5
Gross Profit per customer
$0.37
$4.51
2.2 Cost of providing customer service to each customer
Customer Service Costs
$70,000
$77.78
Per Customer
Number of Customers (500 + 400)
900
Note 1 –
$$
Engineering support
26500
Electricity
25000
Setup Costs
43000
Total Indirect Manufacturing Overhead Costs
94500
Note 2 – Total Estimated Direct labor hours
Product A
Product B
Total
Estimated Production Volume Units
10,000
2,000
Required Direct Labor Hour Per Unit
0.4
1.4
Total Direct Labor Hours Required
4000
2800
6800
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts
1) Compute the manufacturing cost per unit using the plant-wide overhead rate based on direct labor hours
Manufacturing Overhead Costs (Refer calculation)
$94,500
$13.90
per direct labor hour
Direct labor hours (Refer calculation)
6,800
Overhead Assigned
Activity Driver (Refer Note 2)
Plantwide OH Rate
Total Overhead Cost
Unit Produced
OH Cost per unit
(A)
(B)
(O=A*B)
(P)
(O/P)
Product A
4000 DLHs
$13.90
$55,600
10,000
$5.56
Product B
2,800 DLHs
$13.90
$38,920
2,000
$19.46
Product A
Product B
Direct materials
$14.00
$25.00
Direct Labors
$8.00
$28.00
Applied Manufacturing Overhead
$5.56
$19.46
Total Manufacturing Costs
$27.56
$72.46
1.2 Gross Profit Per Unit
Product A
Product B
Market Price
$35
$95
Manufacturing Cost per unit (Refer Part 1)
$27.56
$72.46
Gross Profit per unit
$7.44
$22.54
2.1 Gross Profit generated by each customer
Product A
Product B
Gross Profit per unit
$7.44
$22.54
Units purchased per customer
(Product A 10,000 Units / 500 Customer and Product B 2,000 / 400 Customer)
20
5
Gross Profit per customer
$0.37
$4.51
2.2 Cost of providing customer service to each customer
Customer Service Costs
$70,000
$77.78
Per Customer
Number of Customers (500 + 400)
900
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.