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In: Accounting

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

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