11 “The Tonowing data are for me two products Produceuty acros Compariy 0.35 points Direct materials…
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Question “11 “The Tonowing data are for me two products Produceuty acros Compariy 0.35 points Direct materials…”
11 “The Tonowing data are for me two products Produceuty acros Compariy 0.35 points Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Numer of customers Product A $13 per unit 0.5 DLH per unit 0.4 MH per unit 110 batches 10,000 units 10 modifications 500 custos $35 per unit Product B $28 per unit 1.5 DLH per unit 1.1 MII per unit 220 batches 2,000 unite 50 modifications 400 customers 95 per unit per ulit Market price eBook The company’s direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Ask Driver Indirect manufacturing Engineering support Electricity Setup costs Nonmanufacturing Customer service $25,500 Engineering modifications 24,800 Machine hours 12,000 Batches Print 70,000 Number of customers References 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.) 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Overhead Assigned Product A Product B Product A Product B 1.2 What is the gross profit per unit? Product A Product B Market price Gross profit per unit 2.1 How much gross profit is generated by each customer of Product A and Product B using the plantwide overhead rate? Product A A Product B Gross profit per unit Units purchased per customer Gross profit per customer 2.2 What is the cost of providing customer service to each customer? Is the gross profit adequate for each customer of Product A and B using the plantwide overhead rate? Product A Product B Gross profil per customer Customer service cost per customer Profit (loss) por customer Is the profit adequato? ?
3.1 Determine the manufacturing cost per unit of each product line using ABC. Engineering Support Electricity Setup Overhead Assigned Activity Driver Activity rate Total Overhead Cost Product A Engineering support Electricity Setup Product B Engineering support Electricity Setup Product A Product B Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 3.2 What is the gross profit per unit? Product A Product B Market price (26.43) (87.02) 4.1 How much gross profit is generated by each customer of Product A and Product B using ABC? Product A Product B Units purchased per customer Gross profit (loss) per customer 4.2 Is the gross profit adequate for each customer of Product A and B using ABC? Product A Product B Gross profit (loss) per customer Customer service cost per customer Profit (loss) per customer Is the profit adequate using ABC?
Answer
Tadros Company | ||
Total Manufacturing overhead | Amount $ | Note |
Engineering Support | 25,500.00 | |
Cost of electricity | 24,800.00 | |
Installation costs | 42,000.00 | |
Total Manufacturing overhead | 92,300.00 | A |
Answer 1 | ||||
Calculation of Predetermined OH Rate | Product A | Product B | Total | |
Volume | 10,000.00 | 2,000.00 | B | |
Direct Labor Hour Per unit | 0.50 | 1.50 | C | |
Total Direct Labor Hours | 5,000.00 |
3,000.00 | 8,000.00 | D=B*C |
Total Manufacturing overhead | 92,300.00 | See A | ||
Predetermined OH Rate |
11.54 | F=A/D | ||
Allocated OH per unit | 5.77 | G=F*C |
Direct Labor per hour |
20.00 | H |
Direct Labor cost per unit | 10.00 | I=H*C |
Total manufacturing cost | Product A | |
Direct Materials | 13.00 | |
Direct Labor | 10.00 | See I |
Allocated OH per unit | 5.77 | See G |
Total manufacturing cost |
28.77 | J |
Answer 1.2 | Product A | |
Price marker | 35.00 | K |
Manufacturing cost per unit | 28.77 | See J |
Gross profit per unit | 6.23 | L=K-J |
Answer 2.1 | ||
Units purchased per customer | Product A | |
Volume | 10,000.00 | See B |
Number of customers | 500.00 | M |
Units purchased per customer |
20.00 | N=B/M |
Gross profit generated by each customer | ||
Gross profit per unit | 6.23 | See L |
Per customer, units purchased | 20.00 | See N |
Gross profit per customer |
124.60 | O=L*N |
Answer 2.2 | ||||
Customer service cost per customer | Product A | Product B | Total | |
Number of customers | 500.00 | 400.00 |
900.00 | P |
Customers costs | 70,000.00 | Q | ||
Customer service cost per customer |
77.78 | R=Q/P |
Product A | ||
Gross profit per customer | 124.60 | See O |
Customer service cost per customer | 77.78 | See R |
Profit (loss) per customer | 46.82 | S=O-R |
Profit is positive so profit is adequate. |
Answer 3.1 | ||||
Calculation of machine hours | Product A | Product B | Total | |
Volume | 10,000.00 | 2,000.00 | See B | |
Machine Hour Per unit | 0.40 | 1.10 | T | |
Total machine hours | 4,000.00 |
2,200.00 | 6,200.00 | U=B*T |
Calculation of ABC rates for overhead | V | W | X | Y=W+X | Z=V/Y | |
Activity usage | ||||||
Activity cost pool | Activity Measure | Cost | Product A | Product B | Total | ABC rates |
Engineering Support | Engineering modifications | 25,500.00 | 10.00 | 50.00 | 60.00 | 425 |
Cost of electricity | Machine Hours | 24,800.00 | 4,000.00 | 2,200.00 | 6,200.00 | 4.00 |
Installation costs | Batches | 42,000.00 | 110.00 | 220.00 | 330.00 | 127.27 |
Total Cost assigned | 92,300.00 |
Allocation table | |||||
Product A | See Z | See W | AA=Z*W | ||
Activity cost pool | Activity Measure | ABC Rates | Activity used | Cost assigned | |
Engineering Support | Engineering modifications | 425 | 10.00 | 4,250.00 | |
Cost of electricity | Machine Hours | 4.00 | 4,000.00 | 16,000.00 | |
Installation costs | Batches | 127.27 | 110.00 | 14000.00 | |
Total Cost assigned | 34,250 | AB | |||
Produced units | 10,000.00 | See B | |||
Costs per unit | 3.43 | AC=AB/B |
Total manufacturing cost | Product A | |
Direct Materials | 13.00 | |
Direct Labor | 10.00 | See I |
Allocated OH per unit | 3.43 | See AC |
Total manufacturing cost |
26.43 | AD |
Answer 3.2 | Product A | |
Price marker | 35.00 | K |
Manufacturing cost per unit | 26.43 | See AD |
Gross profit per unit | 8.57 | AE=K-D |
Answer 4.1 | ||
Gross profit generated by each customer | ||
Gross profit per unit | 8.57 | See AE |
Per customer, units purchased | 20.00 | See N |
Gross profit per customer | 171.40 | AF=AE*N |
Answer 4.2 | Product A | |
Gross profit per customer | 171.40 | See AF |
Customer service cost per customer | 77.78 | See R |
Profit (loss) per customer | 93.6 | AG=AF-R |
Profit is positive so profit is adequate. |
Conclusion
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