Question

The following data are for the two products produced by Tadros Company. Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Number of customers Market price Product A $13 per unit 0.4 DLH per unit 0.3 MH per unit 100 batches 10,000 units 9 modifications 500 customers $36 per unit Product B $26 per unit 1.4 DLH per unit 1.0 MB per unit 200 batches 2,000 units 45 modifications 400 customers $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 Engineering support Electricity Setup costs Nonmanufacturing Customer service $25,500 Engineering modifications 25,000 Machine hours 41,000 Batches 71,000 Number of customers 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. Overhead Assigned ty Plantwide OH rate Total Overhead Cost sd Units Produced OH Cost per unit Product A Product A Direct material cost per unit Direct labor cost per unit Overhead cost per unit < Prey 21 of 24 Next >

Answer 1

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Tadros Company
Total Manufacturing overhead	Amount $	Note
Engineering Support	25,500.00
Electricity cost	25,000.00
Setup costs	41,000.00
Total Manufacturing overhead	91,500.00	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	0.40	1.40		C
Total Direct Labor Hours	4,000.00	2,800.00	6,800.00	D=B*C
Total Manufacturing overhead			91,500.00	See A
Predetermined OH Rate			13.46	F=A/D
Allocated OH per unit	5.38			G=F*C
Direct Labor per hour	20.00			H
Direct Labor cost per unit	8.00			I=H*C

Total manufacturing cost	Product A
Direct Materials	13.00
Direct Labor	8.00	See I
Allocated OH per unit	5.38	See G
Total manufacturing cost	26.38	J
Answer 1.2	Product A
Marker price	36.00	K
Manufacturing cost per unit	26.38	See J
Gross profit per unit	9.62	L=K-J
Answer 2.1
Units purchased per customer	Product A
Volume	10,000.00	See B
Number of customer	500.00	M
Units purchased per customer	20.00	N=B/M
Gross profit generated by each customer
Gross profit per unit	9.62	See L
Units purchased per customer	20.00	See N
Gross profit per customer	192.00	O=L*N

Answer 2.2
Customer service cost per customer	Product A	Product B	Total
Number of customer	500.00	400.00	900.00	P
Customer costs			71,000.00	Q
Customer service cost per customer			78.89	R=Q/P
	Product A
Gross profit per customer	192.00			See O
Customer service cost per customer	78.89			See R
Profit (loss) per customer	113.11			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	0.30	1.00		T
Total machine hours	3,000.00	2,000.00	5,000.00	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	9.00	45.00	54.00	472.22
Electricity cost	Machine Hours	25,000.00	3,000.00	2,000.00	5,000.00	5.00
Setup costs	Batches	41,000.00	100.00	200.00	300.00	136.67
Total Cost assigned		91,500.00

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	472.22	9.00	4,249.98
Electricity cost	Machine Hours	5.00	3,000.00	15,000.00
Setup costs	Batches	136.67	100.00	13,667.00
Total Cost assigned				32,916.98	AB
Units produced				10,000.00	See B
Costs per unit				3.29	AC=AB/B

Total manufacturing cost	Product A
Direct Materials	13.00
Direct Labor	8.00	See I
Allocated OH per unit	3.29	See AC
Total manufacturing cost	24.29	AD
Answer 3.2	Product A
Marker price	36.00	K
Manufacturing cost per unit	24.29	See AD
Gross profit per unit	11.71	AE=K-D
Answer 4.1
Gross profit generated by each customer
Gross profit per unit	11.71	See AE
Units purchased per customer	20.00	See N
Gross profit per customer	234.00	AF=AE*N
Answer 4.2
	Product A
Gross profit per customer	234.00	See AF
Customer service cost per customer	78.89	See R
Profit (loss) per customer	155.11	AG=AF-R
Profit is positive so profit is adequate.

Answer 5

Activity-based costing system