Question

The following data are for the two products produced by Shakti Company.

	Product A		Product B
Direct materials	$	15 per unit	$	24 per unit
Direct labor hours		0.3 DLH per unit		1.6 DLH per unit
Machine hours		0.1 MH per unit		1.2 MH per unit
Batches		125 batches		225 batches
Volume		10,000 units		2,000 units
Engineering modifications		12 modifications		58 modifications
Number of customers		500 customers		400 customers
Market price	$	30 per unit	$	120 per unit

The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows.

	Costs				Driver
Indirect manufacturing
Engineering support		$	24,500		Engineering modifications
Electricity			34,000		Machine hours
Setup costs			52,500		Batches
Nonmanufacturing
Customer service			81,000		Number of customers

I am getting stuck on the following:

4.1 How Much gross profit is generated by each customer of Product A and Product B.

Gross profit (loss) per unit Product A $5.71 Product B $24.98

Units purchased per customer 20 5

Gross Profit (loss) per customer ? ?

4.2 Is the gross profit adequate for each customer of Product A and Product B?

Gross profit (loss) per customer Product A ? Product B ?

Service Cost Per Customer 90 90

Profit (loss) per customer ? ?

Answer 1