Consider the following data for two products of Gitano Manufacturing. (Loss amou

Question

Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places) Product A Product E Number of units produced Direct labor cost ( $25 per DLH) Direct materials cost 1,300 units 11,000 units 0.14 DLH per unit .21 DLH per unit $2.00 per unit 3.10 per unit Activity Overhead costs Machine setup Materials handling Quality control inspections 57,661 60,000 58,200 $175,861

Explanation / Answer

Solution 1:

Total Overhead costs = $175861

Total Direct Labor Hours = Direct labor hours used in Product A + Dorect Labor hours used in Product B

= (11000*0.14) + (1300 *0.21) = 1540 +273 = 1813 labor hours

Overhead rate = Total overhead cost / Total Direct Labor Hours = $175861 / 1813 = $97 per labor hour

Solution 2:

Solution 3:

Solution 4:

Solution 4.2:

Yes the information influence the company strategy as there is change in profit or loss.

Overhead Assigned Activity Driver Plantwide OH rate Total Overhead cost Units Produced OH Cost per unit Product A 1540 $97.00 $149,380.00 11000 13.58 Product B 273 $97.00 $26,481.00 1300 20.37

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