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.

	Product A		Product B
Direct materials	$	14 per unit	$	28 per unit
Direct labor hours		0.4 DLH per unit		1.5 DLH per unit
Machine hours		0.3 MH per unit		1.1 MH per unit
Batches		100 batches		200 batches
Volume		10,000 units		2,000 units
Engineering modifications		8 modifications		40 modifications
Number of customers		500 customers		400 customers
Market price	$	35 per unit	$	95 per unit

The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows.

	Costs				Driver
Indirect manufacturing
Engineering support		$	22,500		Engineering modifications
Electricity			20,800		Machine hours
Setup costs			40,000		Batches
Nonmanufacturing
Customer service			71,000		Number of customers

Required: (Round your per unit cost answers to 2 decimal places and other answers to nearest whole number. Loss amounts should be indicated with minus sign.)

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1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. 0 per direct labor hour oH ost per Activity Overhead Assigned Plantwide OH rate Total Overhead Cost Units Produced Driver unit Product A Product B Product A Product B 1.2 What is the gross profit per unit? Product A Product B Market price Gross profit per unit 2.1 How much gross profit is generated by each customer of Product A and Product Busing the plantwide overhead rate? Product A Product B Gross profit per unit Units purchased per customer Gross profit per customer 2.2 What is the cost of providing customer service to each customer? s the gross profit adequate for each customer of Product A and Busing the plantwide overhead rate? Product A Product B Gross profit per customer Customer service cost per customer Profit (loss) per customer ls the profit adequate? 3.1 Determine the manufacturing cost per unit of each product line using ABC. Engineering Support Electricity