the following data are for the two products produced by tadros company Problem 1
ID: 342368 • Letter: T
Question
the following data are for the two products produced by tadros company
Problem 17-1A Comparing costs using ABC with the plantwide overhead rate LO P1, P3, A1, A2 The following data are for the two products produced by Tadros Company. Product A Product B Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Number of customers Market price $13 per unit $24 per unit 0.4 DLH per unit 0.3 MH per unit 105 batches 10,000 units 10 modifications 500 customers 1.4 DLH per unit 1.0 MH per unit 210 batches 2,000 units 50 modifications 400 customers $35 per unit $95 per unit per unit The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows costs Driver Indirect manufacturing $22,500 Engineering modifications Engineering support Electricity Setup costs 20,000 Machine hours 42,000 Batches Nonmanufacturing Customer service 73,000 Number of customers Requirec: (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.)Explanation / Answer
1) Direct Labor hours for product A = 10,000 units*0.4 DLH per unit = 4,000 hrs
Direct Labor hours for product B = 2,000 units*1.4 DLH per unit = 2,800 hrs
Overhead costs = Engineering support+Electricity+Setup costs
= $22,500+$20,000+$42,000 = $84,500
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Calculation of manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs (A) $84,500 (A/B) $12.43 per direct labor hour Direct Labor Hours (B) 6,800 hrs Overhead Assigned Activity Driver (C) Plantwide OH rate (D) Total Overhead Cost (E = C*D) Units Produced (F) OH Cost per unit (E/F) Product A 4,000 $12.43 $49,720 10,000 $4.97 Product B 2,800 $12.43 $34,804 2,000 $17.40 Total manufacturing cost per unit Product A Product B Direct Material cost per unit $13 $24 Direct Labor cost per unit (0.40*$20) = $8 (1.40*$20) = $28 Overhead cost per unit $4.97 $17.40 Total manufacturing cost per unit $25.97 $69.40Related Questions
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