PROBLEM SET B Wade Company makes two distinct products, with the following information available for each. Standard Deluxe Problem 17-1B Comparing costs using ABC with the plantwide overhead rate A1 A2 P1 P3 Direct materials ................... Direct labor hours ..... Machine hours ... Batches $4 per unit 4 DLH per unit 3 MH per unit 175 batches 40,000 units 50 modifications 1,000 customers $92 per unit $8 per unit 5 DLH per unit 3 MH per unit 75 batches 10,000 units 25 modifications 1,000 customers $125 per unit Volume ... Engineering modifications .. Number of customers. Market price................ 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 ...... $ 56,250 112,500 41,250 Engineering modifications Machine hours Batches ..... 250,000 Number of customers Check (1) Gross profit per unit: Standard, $3.80; Deluxe, $12.80 Required 1. Compute the manufacturing cost per unit using the plantwide overhead rate based on machine hours. What is the gross profit per unit? 2. How much gross profit is generated by each customer of the standard product using the plantwide overhead rate? How much gross profit is generated by each customer of the deluxe product using the plantwide overhead rate? What is the cost of providing customer service to each customer? What information is provided by this comparison? 3. Determine the manufacturing cost per unit of each product line using ABC. What is the gross profit per unit? (3) Gross profit per unit: Standard, $4.09; Deluxe, $11.64