Exercise 04-12 Using ABC for strategic decisions LO P1, P3 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 (@ $24 per DLH) Direct materials cost Product 11,000 units 0.17 DLH per unit $ 2.10 per unit Product B 1,100 units 0.26 DLH per unit $ 2.70 per unit Activity Machine setup Materials handling Quality control inspections Overhead costs $ 52,664 57,000 93,000 $202,664 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. 0 Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Product A Product B Product A Product B 2. If the market price for Product A is $27.28 and the market price for Product B is $60, determine the profit or loss per unit for each product. Product A Product B Market price 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? Product A Product B 11 26 setups Number of setups required for production Number of parts required Inspection hours required setups part/unit 16 9 part/unit 50 hours 250 hours Machine setup 0 Materials handling O Quality control 01 Overhead Assigned Activity Driver Activity Rate Total Overhead Cost Product A Machine setup Materials handling Quality control $ 0 Product B Machine setup Materials handling Quality control $ 0 Product A Product B Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 4. Determine the profit or loss per unit for each product assuming ABC costing. Product A Product B Market price 4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy? Yes No