The following data are for the two products produced by Aplan Company.

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

Required
1. Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours. What is the gross profit per unit?
2. How much gross profit is generated by each customer of Product A using the plantwide overhead rate? How much gross profit is generated by each customer of Product B 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?
4. How much gross profit is generated by each customer of Product A using ABC? How much gross profit is generated by each customer of Product B using ABC? Is the gross profit per customer adequate?
5. Which method of product costing gives better information to managers of this company? Explainwhy.

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Product A Product B Direct Direct labor hours0.3 DLH per unit 6 DLH per unit Machine hours ...0.1 MH per unit .2 MH per unit materials .$15 per unit $24 per unit 125 batches 225 batches 2.000 units Engineering modifications 12 modifications 58 modifications Number of customers 500 customers 400 customers Market price $30 per unit $120 per unit Costs Driver Indirect manufacturing Engineering support4,500 Engineering modifications Electricity ...34,000 Machine hours Nonmanufacturing Customer service 81,000 Number of customers