I REALLY NEED HELP WITH THIS QUESTION, PLEASE HELP PROBLEM SET A The following d
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I REALLY NEED HELP WITH THIS QUESTION, PLEASE HELP
PROBLEM SET A The following data are for the two products produced by Tadros Company Product A Product B Problem 17-1A Comparing costs using ABC with the plantwide overhead rate P1 P3 A1 A2 Direct materials Direct labor hours Machine hours $15 per unit 0.3 DLH per unit 1.6 DLH per unit . 0.1 MH per unit .2 MH per unit $24 per unit 225 batches 2,000 units 10,000 units Volume Engineering modifications Number of customers Market price . 12 modifications 58 modifications 500 customers 400 customers $30 per unit $120 per unit Chapter 17 Activity-Based Costing and Analysis 767 The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing .. . . .. . .$24,500 Engineering modifications Engineering support Electricity Setup costs 34,000 Machine hours 52,500 Batches Customer service 81,000 Number of customers Required 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor Check 1) Product A, $26.37 per hours. What is the gross profit per unit? unit cost 2. How much gross profit is generated by each customer of Product A using the plantwide overhead rate? How much gross profit is generated by each customer of Product B using the plantwide over- head rate? What is the cost of providing customer service to each customer? What information is provided by this comparison? 3. Determine the manufacturing cost per unit of each product line using ABC. What is the gross profit 4. How much gross profit is generated by each customer of Product A using ABC? How much gross profit 5. Which method of product costing gives better information to managers of this company? Explain why 3) Product A, $24.30 per per unit? unit cost is generated by each customer of Product B using ABC? Is the gross profit per customer adequate?Explanation / Answer
Caclculation of maufactring cost per unit -
2.
Analysis - Non Manufacturing cost per cusotmer is greater than manufacturing cost in product A. which will tells us that co. expense lot in customer relation.
3.
3. Calculation of manufacturing cost per unit based on ABC -
Note- engineering support are allocated based on engineering modification which is 24500*12/70 & 24500*58/70.
Setup cost are allocated based on batches which is 34000*125/350, 34000*225/350.
Electricity cost are based on machine hours which will be calculated as follows -
machine hours 0.1 MH per unit and 1.2 MH per unit
0.1*no. of units(10000) = 1000 and 1.2*2000 = 2400
so 34000*1000/3400 =10000 for A
and 34000*2400/3400 = 24000 for B.
4.
Analysis - Product B proft per customer is much higher than product A profit per customer.
5. second method which is based in ABC because every overhead is distributed on related activity basis which is correct basis of apportionment not like on single basis which will tell the actual cost of per unit of activity. manager can analyse the cost per activity which will breif the true picture and control the overhead through control the activity.
Please note all values are in $.
In case of anyclarification required please comment.
Manufacturing cost based on direct labour hours Direct labour hours consumed 3000 3200 6200 Particulars A B Total Cost Direct material per unit 150000 48000 Direct labor Cost per unit 60000 64000 Indirect manufacturing cost Engineering Cost (24500*3000/6200), (24500*3200/6200) 11854.84 12645.16 24500 Electricity (34000*3000/6200), (34000*3200/6200) 16451.61 17548.39 34000 Setupcost (52500*3000/6200), (52500*3200/6200) 25403.23 27096.77 52500 Total manufacturing cost 263709.68 169290.32 Total manufactring cost per unit (Manufacturing cost / unit man.) 26.37 84.65Related Questions
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