Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with...

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	10,500 units	1,800 units
Direct labor cost (@ $28 per DLH)	0.17 DLH per unit	0.21 DLH per unit
Direct materials cost	$ 1.90 per unit	$ 2.30 per unit

Activity	Overhead costs
Machine setup		$	33,941
Materials handling			56,000
Quality control inspections			98,240
		$	188,181

Required

1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line.
		0

Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Product A
Product B

		Product A	Product B





2. If the market price for Product A is $26.57 and the market price for Product B is $63, determine the profit or loss per unit for each product.
		Product A	Product B
Market price


3. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B?
	Product A		Product B
Number of setups required for production	12	setups	20	setups
Number of parts required	18	part/unit	12	part/unit
Inspection hours required	52	hours	255	hours

Machine setup
		0

Materials handling
		0

Quality control
		0


Overhead Assigned	Activity Driver		Activity Rate		Total Overhead Cost
Product A
Machine setup
Materials handling
Quality control
					$0


Product B
Machine setup
Materials handling
Quality control
					$0


Total manufacturing costs		Product A	Product B
Direct Materials per unit
Direct Labor per unit
Overhead per unit
Total manufacturing cost per unit

4. Determine the profit or loss per unit for each product assuming ABC costing.
		Product A	Product B
Market price

4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy?

No
Yes

Expert Solution

ekkarill92 answered 2 years ago

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