Question

i need some to work this out because giving me the answer doesnt help. I do not understand this problem.

Check my work Vie 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 ok Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Number of customers Market price Product: A $14 per unit 0.5 DLH per unit 0.4 MH per unit 115 batches 10,000 units 10 modifications 500 customers $35 per unit Product B $26 per unit 1.5 DLH per unit 1.1 MH per unit 230 batches 2,000 units 50 modifications 400 customers $95 per unit per unit nt ences The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Costs Driver $22,660 Engineering modifications Indirect manufacturing Engineering support Electricity Setup costs Monmanufacturing Customer service 24,800 Machine hours 43,00 Batches 74,000 Number of customers

Answer 1

Requirement 1 Engineering Support Electricity Setup costs Total Manufacturing Overhead $ $ $ $ 22,000 24,800 43,000 89,800 DLH in Product A DLH in Product B Total DLH (0.5*10000) (1.5*2000) 5000 3000 8000 Plantwide OH rate (163800/8000) $ 11.23 Overhead Assigned Activity Driver Plantwide Total OH cost OH rate $ 11.23 $ 56,150 $ 11.23 $ 33,690 Units produced 10000 2000 OH cost per unit $ 5.62 $ 16.85 Product A Product B 5000 3000 Total Manufacturing cost per unit: Direct Materials Direct Labor Overhead assigned Total manufacturing costs Product A Product B $ 14.00 $ 26.00 $ 10.00 $ 30.00 $ 5.62 $ 16.85 $ 29.62 $ 72.85 Requirement 1.2 Market Price (A) Manufacturing cost per unit (B) Gross Profit per unit (A-B) Product A Product B $ 35.00 $ 95.00 $ (29.62) $ (72.85) $ 5.38 $ 22.15 Requirement 2.1 Gross Profit per unit (A) Units purchased per customer (B) Gross Profit per customer (A*B) Product A Product B $ 5.38 $ 22.15 20 5 $ 107.60 $ 110.75

Requirement 2.2 Cost of providing customer service to each customer (74000/900) $ 82.22 Gross Profit per customer Customer service cost per customer Profit/(loss) per customer Is the profit adequate? Product A Product B $ 107.60 $ 110.75 $ 82.22 $ 82.22 $ 25.38 $ 28.53 Yes Yes Requirement 3.1 Engineering Support $ 60 366.67 per modification Electricity $ 4.00 per machine hour 22,000 $ (10+50) 24,800 6200 $ (0.4*10000+1.1*2000) 43,000 345 $ (115+230) Setup $ 124.64 per batch Overhead Assigned Activity Driver Plantwide OH rate Total OH cost Product A Engineering Support Electricity Setup Total Units produced OH cost per unit 10 4000 115 $ $ $ 366.67$ 4.00 $ 124.64 $ $ 3,667 16,000 14,334 34,000 10000 3.40 $ $ 50 Product B Engineering Support Electricity Setup Total Units produced OH cost per unit 2200 230 $ $ $ 366.67 $ 4.00 $ 124.64 $ $ 18,333 8,800 28,667 55,800 10000 5.58 $

Total Manufacturing cost per unit: Direct Materials Direct Labor Overhead assigned Total manufacturing costs Product A Product B $ 14.00 $ 26.00 $ 10.00 $ 30.00 $ 3.40 $ 5.58 $ 27.40 $ 61.58 Requirement 3.2 Market Price (A) Manufacturing cost per unit (B) Gross Profit per unit (A-B) Product A Product B $ 35.00 $ 95.00 $ (27.40) $ (61.58) $ 7.60 $ 33.42 $ Requirement 4.1 Gross Profit per unit (A) Units purchased per customer (B) Gross Profit per customer (A*B) Product A Product B $ 7.60 $ 33.42 20 5 $ 152.00 $ 167.10 Requirement 4.2 Cost of providing customer service to each customer (74000/900) $ 82.22 Gross Profit per customer Customer service cost per customer Profit/(loss) per customer Is the profit adequate? Product A Product B $ 152.00 $ 167.10 $ 82.22 $ 82.22 $ 69.78 $ 84.88 Yes Yes $ Requirement 5 Activity-based costing method gives better information to the managers of this company.