onsider the following data for two products of Gitano Manufacturing. (Loss amoun
ID: 2399054 • Letter: O
Question
onsider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Roun OH rate and cost per unit" answers to 2 decimal places.) 10,000 units 2,008 units Number of units produced Direct labor cost (@ $24 per DLH) Direct materials cost 20 DLH per unie e.25 DLH per unit $ 2 per unit s 3 per unit Machine setup Materials handling Quality control inspections $121,000 48,800 80,006 $249,000 equired: 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. Activity Driver OH Cost per unit Plantwide OH rate Total Overhead Cost Overhead Assigned Product A Product B Units Produced ProductA Product B 2. If the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. Product A Product B Market price Prey 9 of 1 NextExplanation / Answer
Answer 1. Predetermined Overhead Rate = $249,000 (Total Overhead) / 2,500 DLH Predetermined Overhead Rate = $99.60 per DLH Direct Labor Hours Product A - 10,000 Units X 0.20 DLH 2,000 Product B - 2,000 Units X 0.25 DLH 500 Total Direct Labor Hours 2,500 Overhead Assigned Activity Driver Plantwide OH Rate Total Overhead Cost Units Produced OH Cost per Unit Product A 2,000 99.60 199,200.00 10,000 19.92 Product B 500 99.60 49,800.00 2,000 24.90 Calculation of Unit Product Cost Under Traditional Costing Product A Product B Direct Material 2.00 3.00 Direct Labor 4.80 6.00 Applied Overhead 19.92 24.90 Product Cost per Unit 26.72 33.90 Answer 2. Product A Product B Market Price per Unit 20.00 60.00 Product Cost Per Unit 26.72 33.90 Profit (Loss) per Unit (6.72) 26.10 Answer 3. ABC Costing Activity Overhead Cost Driver Quantity Allocation Rate Indirect Costs Machine Setups 121,000.00 22 setups 5,500.00 per setups Materials Handling 48,000.00 16,000 parts 3.00 per parts Quality Control Inspections 80,000.00 250 hours 320.00 per hour Total 249,000.00 Assigning Overhead Cost to Product Model Using ABC Method Activity Based Overhead Rate Product A Product B Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Machine Setups 5,500.00 per setups 10 setups 55,000.00 12 setups 66,000.00 Materials Handling 3.00 per parts 10,000 parts 30,000.00 6,000 parts 18,000.00 Quality Control Inspections 320.00 per hour 40 hours 12,800.00 210 hours 67,200.00 Total Overhead 97,800 151,200 No. Of Units 10,000 2,000 Overhead per Book 9.78 75.60 Calculation of Unit Product Cost Under ABC Costing Product A Product B Direct Material 2.00 3.00 Direct Labor 4.80 6.00 Applied Overhead 9.78 75.60 Product Cost per Unit 16.58 84.60 Answer 4. Product A Product B Market Price per Unit 20.00 60.00 Product Cost Per Unit 16.58 84.60 Profit (Loss) per Unit 3.42 (24.60)
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