Consider the following data for two products of Gitano Manufacturing.

Required
1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line.
2. If the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. Comment on the results.
3. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B?

4. Determine the profit or loss per unit for each product. Should this information influence company strategy? Explain.

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Overhead Cost Product A 10,000 units 0.20 DLH per unit $2 per unit Product B 2.000 units 0.25 DLH per unit $3 per unit Number of units produced.. Direct labor cost(@$24 per DLH) .. Activity $121,000 48,000 80,000 $249,000 Product A Product B Number of setups required for production Number of parts required.. Inspection hours 10 setups I part/unit 40 hours 12 setups 3 parts/unit 210 hours . ..