Exercise 17-10 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 "OH rate and cost per unit" answers to 2 decimal places.) Number of units produced Direct labor cost (e $24 per DLR) Direct materials cost Product A 10,000 units 0.20 DLR per unit $ 2 per unit Prodacta 2,000 units 0.25 D per unit $ 3 per unit Activity Machine setup Materials handling Quality control inspections Overhead costs $121,000 48,000 80,000 $249,000 Required: 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. 4 Units Produced OH Cost per unit Activity Driver Total Overhead Cost Plantwide OH rate Overhead Assigned Product A Product B 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line Overhead Assigned OH Cost per Activity Driver Plantwide OH rate Total Overhead Cost Units Produced unit Product A Product B Product A Product B 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 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 Number of setups required for production 10 setups 12 setups Number of parts required 1 part/unit 3 part/unit Inspection hours required 40 hours 210 hours Inspection hours required 40 hours 210 hours Machine setup Materials handling Quality control Activity Driver Activity rate Total Overhead Cost Overhead Assigned Product A Machine setup Materials handling Quality control Product B Machine setup Materials handling Quality control Quality control 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 Should this information influence company strategy? O No Yes