Problem 4-1A Comparing costs using ABC with the plantwide overhead rate LO P1, P3, A1, A2 The following data are for the two products produced by Tadros Company. Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Number of customers Market price Product A $15 per unit 0.3 DLH per unit 0.1 MH per unit 125 batches 10,000 units 12 modifications 500 customers $30 per unit Product B $24 per unit 1.6 DLH per unit 1.2 MH per unit 225 batches 2,000 units 58 modifications 400 customers $120 per unit The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing Engineering support Electricity Setup costs Nonmanufacturing Customer service $ 24,500 Engineering modifications 34,000 Machine hours 52,500 Batches 81,000 Number of customers Required: (Loss amounts should be indicated with minus sign. Round your per unit cost answers to 2 decimal places.) X Answer is not complete. 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. Overhead costs $ 111,000 $ 17.90 per direct labor perc Overhead Assigned Units Produced Product A Product B Activity Driver 3,000 3,200 Plantwide OH rate $ 17.90 $ 17.90 Total Overhead Cost $ 53,700 $ 57,280 10,000 2,000 OH Cost per unit $ 5.37 $ 28.64 $ Total manufacturing cost per unit: Direct material cost per unit Direct labor cost per unit Overhead cost per unit Product A 15.00 6.00 5.37 Product B 15.00 X 32.00 28.64 1.2 What is the gross profit per unit? Product A Product B Market price $ 30.00 $ 120.00 Manufacturing cost per unit (26.37) (75.64) Gross profit per unit 3.63 $ 44.36X 2.1 How much gross profit is generated by each customer of Product A and Product B using the plantwide overhead rate? Product A Product B 44 1.2 What is the gross profit per unit? Product A Product B Market price $ 30.00 $ 120.00 Manufacturing cost per unit (26.37) L (75.64) Gross profit per unit 3.63 $ 44.36 X 2.1 How much gross profit is generated by each customer of Product A and Product B using the plantwide overhead rate? Product A Product B Gross profit per unit 44.36 Units purchased per customer 200 5 Gross profit per customer 72.60 $ 221.80X 2.2 What is the cost of providing customer service to each customer? Customer service s 81,000 $ 90.00 per customer costs Number of customers 900 Is the gross profit adequate for each customer of Product A and B using the plantwide overhead rate? Product B 221.80 $ $ Gross profit per customer Customer service cost per customer Profit (loss) per customer Is the profit adequate? Product A 72.60 90.00 17.40 No $ $ 90.00 131.80 Yes EEE EE $ 24,500 Engineering Support Overhead costs Number of modifications Electricity Overhead costs Number of machine hours $ 34,000 Is the profit adequate? No Yes 3.1 Determine the manufacturing cost per unit of each product line using ABC. Engineering Support Overhead costs $ 24,500 0 Number of modifications Electricity Overhead costs $ 34,000 Number of machine hours Setup Overhead costs $ 52,500 Number of batches Overhead Assigned Activity Driver Activity rate Activity rate Total Overhead Cost Product A Engineering modifications Electricity 12 1,000 125 machine hours batches Setup modifications Product B Engineering support Electricity Setup 58 2,400 225 machine hours batches 0 $ 0 Product A Product B $ $ Total manufacturing costs Direct Materials per unit Direct Labor per unit Overhead per unit Total manufacturing cost per unit 19,000.00 12,200.00 X 0.00 XL 43,200.00 X 23,800.00 X 0.00 3.2 What is the gross profit per unit? Product Product B Market price $ 30.00 $ 120.00 Manufacturing cost per unit 0.00 0.00 Gross profit(loss) per unit 5.71 $ 24.98 4.1 How much gross profit is generated by each customer of Product A and Product B using ABC? Product A Product B Gross profit(loss) per unit $ 5.71 $ 24.98 Units purchased per customer 500 x 400 x Gross profit (loss) per $ 114.10 $ 124.88 customer 4.2 Is the gross profit adequate for each customer of Product A and B using ABC? Product Product B Gross profit (loss) per customer $ 114.10 $ 124.88 Customer service cost per 90.00 90.00 customer Profit (loss) per customer 24.10 $ 34.88 Is the profit adequate using Yes Yes ABC