Question

Question 5

Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places.) Number of units produced Direct labor cost (@ $30 per DLH) Direct materials cost Product A 11,000 units 0.13 DLH per unit $ 2.50 per unit Product B 1,300 units 0.26 DLH per unit $ 2.70 per unit Activity Machine setup Materials handling Quality control inspections Overhead costs $ 6,920 56,000 87,360 $150,280

Answer 1

1)	Using direct labor hours as the basis for assigning overhead costs,determine the total production cost per unit for each
	product line
	Overhead costs		150,280	85	per direct labor hr
	Direct labor hours		1768
	Overhead assigned		Activity	Plantwide	Total	Units	OH cost
			driver	OH rate	oH cost	produced	per unit
	Product A		1430	85	121550	11,000	11.05
	Product B		338	85	28730	1,300	22.1
	total manufacturing cost per unit				Product A	Product B
	Direct materials cost per unit				2.5	2.7
	Direct labor cost per unit				3.9	7.8
	Overhead cost per unit				11.05	22.1
	Total manufacturing cost				17.45	32.6
2)	If the market price for product A is        and the market pricefor Product B is ,determine the profit or loss for each product
					Product A	Product B
	Market price				23.69	61
	Manufacturing cost per unit				17.45	32.6
	Profit(loss) per unit				6.24	28.4
3)	Consider the following addittional information about these two product lines .IF Abc is used for assigning overhead cost
	Machine setup
	Overhead costs		6,920	230.67	per setup
	number of setups		30
	Material handling
	Overhead costs		56,000	0.27	per part
	number of parts		208400
	Quality control
	Overhead costs		87,360	320.00	per inspection hour
	inspection hours		273
	Overhead assigned		Activity Driver		Activity rate		total OH cost
	Product A
	Machine setup		2	per setup	230.67	per setup	461
	Material handling		198,000	per part	0.27	per part	53205
	Quality control		58	per inspection hour	320.00	per inspection hour	18560
	total overhead costs assigned						72227
	total units produced						11,000
	overhead cost per unit						6.57
	Product b
	Machine setup		28	per setup	230.67	per setup	6459
	Material handling		10,400	per part	0.27	per part	2795
	Quality control		215	per inspection hour	320.00	per inspection hour	68800
	total overhead costs assigned						78053
	total units produced						1,300
	overhead cost per unit						60.04
	total manufacturing cost per unit				Product A	Product B
	Direct materials cost per unit				2.5	2.7
	Direct labor cost per unit				3.9	7.8
	Overhead cost per unit				6.57	60.04
	Total manufacturing cost				12.97	70.54
4)	If the market price for product A is        and the market pricefor Product B is ,determine the profit or loss for each product
					Product A	Product B
	Market price				23.69	61
	Manufacturing cost per unit				12.97	70.54
	Profit(loss) per unit				10.72	-9.54

Yes