Question

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

The following data are for the two products produced by Tadros Company. Direct materials Direct labor hours Machine hours Bat

1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs $ 26

Product A Product B $ 15.00 $ 30.00 Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per un

4.1 How much gross profit is generated by each customer of Product A and Product B using ABC? Product A Product B Gross profi

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Answer #1

Using Normal absorption Costing

Total Computation of Total Direct Labour Hours and its cost Product A Product B Cost per Hour 27 27 DLH Per Unit 1 2 Cost Per

Total Manufcturing Cost per unit Product Product B Direct Material Cost per Unit 15 30 Direct Labor Cost Per unit 13.5 40.51

Using ABC

Computation of total units of Cost Drivers Cost Driver Product A Product B Engineering Modifications 18 Machine Hours 6400 Ba

43,952 17,280 Allocation of Manufacturing Overhead Cost Head Product A Product B Engineering Support 9,648 (18536) (82536)

I have highlighted the portions where you have went wrong. Mainly while calculating the direct labor cost. You have considered the direct labor hours for calculating the manufacturing costs instead of multiplying it with the rate per hour. Other than that everything is alright.However, I have prepared the entire solution again for your easy reference.

Kindly leave a comment for queries, if any.Kindly upvote.

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