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

Question

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

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

Required:

(Round your per unit cost answers to 2 decimal places and other answers to nearest whole number. Loss amounts should be indicated with minus sign.)

5. Which method of product costing gives better information to managers of this company?

Departmental overhead rate method

Activity-based costing method

Plantwide overhead rate method

Product A Product B Direct materials $ 14 per unit $ 24 per unit Direct labor hours 0.6 DLH per unit 1.5 DLH per unit Machine hours 0.5 MH per unit 1.1 MH per unit Batches 125 batches 250 batches Volume 10,000 units 2,000 units Engineering modifications 10 modifications 50 modifications Number of customers 500 customers 400 customers Market price $ 34 per unit $ 95 per unit per unit

Explanation / Answer

Solution 1.1:

Solution 1.2 and 2.1:

Solution 2.2:

Solution 3.1:

Solution 3.2 and 4.1:

Solution 4.2:

Solution 5:

Activity based costing method gives better information ot manager of this company

Computation of overhead rate and Overhead assignment to product - (Plantwide overhead rate) Particulars Product A Product B Total Direct labor hours per unit 0.6 1.5 Volume (In Units) 10000 2000 Direct Labor hours 6000 3000 $9,000.00 Manufacturing overhead $92,300.00 Overehead rate - Per direct labor dollar (Manufacturing overhead/Direct labor) $10.26 Overhead allocation $61,533 $30,767 $92,300 Overhead cost per unit $6.15 $15.38

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