Consider the following data for two products of Gitano Manufacturing. (Loss amou
ID: 2535803 • Letter: C
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 B Number of units produced Direct labor cost( $26 per DLH) Direct materials cost 13,000 units 0.12 DLH per unit $ 1.60 per unit 1,200 units 0.29 DLH per unit $ 2.10 per unit Activity Overhead costs Machine setup Materials handling Quality control inspections $ 10,048 59,000 95,040 $164,088 Required 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. OH Cost per unit Overhead Assigned Product A Product B Activity Driver Plantwide OH rate Total Overhead Cost Units Produced Product A Product B If the market price for Product A is $20.16 and the market price for Product B is $64, determine the profit or loss per unit for each roduct. Product A Product B Market priceExplanation / Answer
Gitano Manufacturing Products A Products B Number of units produced 13000 1200 Units Direct Labor Cost @ 26 per DLH 0.12 0.29 DLH per unit Direct Material Cost 1.6 2.1 Per Unit Activity Overhead Cost Machine Setup $ 10,048.00 Material Handling $ 59,000.00 Quality Control $ 95,040.00 $ 164,088.00 1) Using Direct Labor Hours as basis for assigning Overhead Cost Product Units DLH per unit Total Direct Labor Hours A 13000 0.12 1560 B 1200 0.29 348 14200 1908 Overhead Cost=$164088 Overhead cost per Direct Labor Hours=($164088/1908)= 86 DLH Overhead Assigned Activity Driver Predetermined Overhead Rate Total Overhead Cost Units Produced Overhead Cost Per Unit Product A=(1560*$86) DLH $ 86.00 $ 134,160.00 13000 $ 10.32 Product B=(348*$86) DLH $ 86.00 $ 29,928.00 1200 $ 24.94 Total Manufacturing Cost of Product A Direct Material Cost=13000*1.6 $ 20,800.00 Direct Labor Cost=1560*26 $ 40,560.00 Overhead Cost=1560*$86 $ 134,160.00 Total Manufacturing Cost $ 195,520.00 Manufacturing Cost per unit=($195520/13000) $ 15.04 Total Manufacturing Cost of Product B Direct Material Cost=1200*2.10 $ 2,520.00 Direct Labor Cost=348*26 $ 9,048.00 Overhead Cost=348*$86 $ 29,928.00 Total Manufacturing Cost $ 41,496.00 Manufacturing Cost per unit=$41496/1200 $ 34.58 2) If market price of product A is $20.16 and Product B is $64 Profit or loss Product A Price Per Unit $ 20.16 Cost per Unit $ 15.04 Profit or Loss $ 5.12 Product B Price Per Unit $ 64.00 Cost per Unit $ 34.58 Profit or Loss $ 29.42 3) Products A Product B Total Number of Setup required for Production 5 22 27 Number of Parts required 8 9 17 Inspection Hours required 58 230 288 Machine Setup=$10048/27 setup $ 372.15 Per Setup Material Handling=59000/17 Parts $ 3,470.59 Per Unit Quality Control=$95040/288 $ 330.00 Inspection Hours Product A Direct Material Cost $ 20,800.00 Direct Labor Cost $ 40,560.00 Overhead Setup=(5*372.15) $ 1,860.74 Parts=(8*3470.59) $ 27,764.71 Quality Control=(58*330) $ 19,140.00 Total Cost $ 110,125.45 Cost Per Unit=$110125.45/13000 $ 8.47 Product B Direct Material Cost $ 2,520.00 Direct Labor Cost $ 9,048.00 Overhead Setup=22*372.15 $ 8,187.26 Parts=9*3470.59 $ 31,235.29 Quality Control=(230*330) $ 75,900.00 Total Cost $ 126,890.55 Cost Per Unit=$126890.55/1200 $ 105.74 4) If market price of product A is $20.16 and Product B is $64 Profit or loss Product A Price Per Unit $ 20.16 Cost per Unit $ 8.47 Profit or Loss $ 11.69 Product B Price Per Unit $ 64.00 Cost per Unit $ 105.74 Profit or Loss $ (41.74)
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