Conslder the following data for two products of Gitano Manufacturing. (Loss amou
ID: 2546980 • Letter: C
Question
Conslder the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places) Product A 11,500 units 1,800 units Number of units produced Direct labor cost (e $24 per DLH)0.14 DLH per unit .27 DLB per unit Direct materials cost 5 2.20 per unit $3.10 per unit Machine setup Materials handling Quality control inspections $ 71,522 53,000 68,310 $192,832 Required Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line Activity Driver OH Cost per unit Plantwide OH rate Total Overhead Cost Units Produced Overhead Assigned Product A Product B Product A Product BExplanation / Answer
Req 1 Total labour hours Product A (11500 units @ 0.14) 1610 Product B (1800 units @ 0.27) 486 Total labour hours 2096 Pre-determined OH rate: 92 per DLH Estimated Overheads 192832 DLH 2096 Overheads assigned Activity driver OH rate Total OH Units OH per unit Product A 1610 92 148120 11500 12.88 Product B 486 92 44712 1800 24.84 Req 2: Cost per unt Product A Product B Material cost 2.2 3.1 Labour cost 3.36 6.48 (24*0.14) (24*0.27) OH cost 12.88 24.84 Total cost per unit 18.44 34.42 Profit per unit: Selling price 23.56 65 Less: Cost per unit 18.44 34.42 Profit per unit: 5.12 30.58 Req 3: Machine Setup: 2980.083 per setup Estimated Overheads 71522 Number of setups 24 Material handling 3785.714 per part moved Estimated Overheads 53000 Number of parts moved 14 Quality Control: 230 per inspection Estimated Overheads 68310 Number of Inspection 297 Overheads Assigned: Activity driver Rate Total OH cost Product A Machine Setup 10 setups 2980.083 29800.83 Matrial handling 8 parts 3785.714 30285.71 Quality Control 62 Inspections 230 14260 Total OH 74346.54 Number of units 11500 OH cost per unit 6.46 Overheads Assigned: Activity driver Rate Total OH cost Product B Machine Setup 14 setups 2980.083 41721.16 Matrial handling 6 parts 3785.714 22714.28 Quality Control 235 Inspections 230 54050 Total OH 118485.4 Number of units 1800 OH cost per unit 65.83 Cost per unt Product A Product B Material cost 2.2 3.1 Labour cost 3.36 6.48 (24*0.14) (24*0.27) OH cost 6.46 65.83 Total cost per unit 12.02 75.41 Profit per unit: Selling price 23.56 65 Less: Cost per unit 12.02 75.41 Profit (loss) per unit: 11.54 -10.41 Yes, it will influence the company strategy