Exercise 17-10 Using ABC for strategic decisions LO P1, P3 Consider the followin
ID: 2333894 • Letter: E
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Exercise 17-10 Using ABC for strategic decisions LO P1, P3 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 11,8 units 9.14 DLH per unit 5 2.30 per unit 1,380 units 9.25 DLH per unit 5 2.90 per unit Number of units produced Direct labor cost ( $30 per DEH) Direct naterials cost tint Activity Overhead cost Machine setup Materials handling Quality control inspections 5 53,625 55,900 72,28 $180,905 Required 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. S 180 905 0 per direct labor hour Direct labor hours Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Overhead Assigned .Explanation / Answer
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1 Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. Overhead Costs $ 180,905 $ 97.00 per direct labor hour Direct labor hours 1865 *11000 x 0.14 + 1300 x 0.25 = 1865 Overhead Assigned Activity Driver Plantwide OH rate Total Overhead cost Units Produced OH Cost per unit Product A 1540 $ 97.00 $ 149,380.00 11000 $ 13.58 Product B 325 $ 97.00 $ 31,525.00 1300 $ 24.25 Total manufacturing cost per unit: Product A Product B Direct material cost per unit $ 2.30 $ 2.90 Direct labor cost per unit 4.20 7.50 Overhead cost per unit 13.58 24.25 Total manufacturing cost $ 20.08 $ 34.65 2 If the market price for Product A is $26.32 and the market price for Product B is $58, determine the profit or loss per unit for each product. Product A Product B Market Price $ 26.32 $ 58.00 Manufacturing cost per unit $ 20.08 $ 34.65 Profit(loss) per unit $ 6.24 $ 23.35 3 ABC assignment of overhead Machine Setup Overhead Cost $ 53,625 $ 2,062.50 per setup Activity Driver 26 Materials Handling Overhead Cost $ 55,000 $ 0.44 per part Activity Driver 124300 =11000*10+1300*11 Quality Control Overhead Cost $ 72,280 $ 260.00 per hour Activity Driver 278 Overhead assigned Activity Driver Activity Rate Total Overhead Cost Product A Machine Setup 6 Setups $ 2,062.50 per setup $ 12,375.00 Materials Handling 110000 Part $ 0.44 per part $ 48,400.00 Quality Control 58 hours $ 260.00 per hour $ 15,080.00 $ 75,855.00 ÷ 11000 Overhead Cost per unit $ 6.90 Overhead assigned Activity Driver Activity Rate Total Overhead Cost Product B Machine Setup 20 Setups $ 2,062.50 per setup $ 41,250.00 Materials Handling 14300 Part $ 0.44 per part $ 6,292.00 Quality Control 220 hours $ 260.00 per hour $ 57,200.00 $ 104,742.00 ÷ 1300 Overhead Cost per unit $ 80.57 Total manufacturing cost per unit: Product A Product B Direct material cost per unit $ 2.30 $ 2.90 Direct labor cost per unit 4.20 7.50 Overhead cost per unit 6.90 80.57 Total manufacturing cost $ 13.40 $ 90.97Related Questions
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