Answered Essay: i Safari File Edit View History Bookmarks Window Help 60% 1 Mon 7:16 PM a E ezto.mheducation.com 山口 Chapter 17 Exerciee

i Safari File Edit View History Bookmarks Window Help 60% 1 Mon 7:16 PM a E ezto.mheducation.com 山口 Chapter 17 Exerciees Chegg Study Guided Solutions and Study Help l Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your in answers to 2 decimal places) termediate calculations and OH rate and cost per unit Product A Product B Number of units produced Direct labor cost(@$30 per DLH) Diredt materials cost 13,500 units 0.15 DLH perunit S 2.4 per unit 1,900 units 0.29 DLH per unit $ 2.4 per unit Activity costs Machine setup Materials handling Quality control $101,792 58,000 64,320 $224,112 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 Overhead Assigned Product A Product B Plantwide OH rate Total Overhead Cost Units Produced Product A Product B If the market price for Product A is $25.07 and the market price for Product B is $57, determine the profit or loss per unit for e roduct THE LITTLE GIFT SHO ON THIE THE LITTLE GIFT SHO ON THE

i Safari File Edit View History Bookmarks Window Help 60% 1 Mon 7:16 PM a E ezto.mheducation.com 山口 Chapter 17 Exerciees Chegg Study Guided Solutions and Study Help l Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your in answers to 2 decimal places) termediate calculations and “OH rate and cost per unit” Product A Product B Number of units produced Direct labor cost(@$30 per DLH) Diredt materials cost 13,500 units 0.15 DLH perunit S 2.4 per unit 1,900 units 0.29 DLH per unit $ 2.4 per unit Activity costs Machine setup Materials handling Quality control $101,792 58,000 64,320 $224,112 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 Overhead Assigned Product A Product B Plantwide OH rate Total Overhead Cost Units Produced Product A Product B If the market price for Product A is $25.07 and the market price for Product B is $57, determine the profit or loss per unit for e roduct THE LITTLE GIFT SHO ON THIE THE LITTLE GIFT SHO ON THE

Expert Answer

 

Formula Sheet

A B C D E F G H I
2
3 Product A Product B
4 Number of units produced 13500 1900
5 Direct Labor Cost (@$30 per DLH) per unit 0.15 0.29
6 Direct Materials cost per unit 2.4 2.4
7
8 Cost per direct labor hour 30
9
10 Activity Overhead Cost
11 Machine Setup 101792
12 Materials Handling 58000
13 Quality Control 67320
14 Total 224112
15
16 1)
17
18 Using direct labor as the basis to assign overhead cost, first plantwide overhead rate need to be calculated using following formula:
19
20
21
22
23 Total quantity of direct labour hours used can be calculated as follows:
24 Product Direct Labour hours
25 A =D4*D5
26 B =E4*E5
27 Total direct labor hours =SUM(D25:D26)
28
29 Using the following data:
30 Total overhead cost =D14
31 Total direct labor hours =D27
32
33 Plantwide overhead rate can be calculated as follows:
34
35 Plantwide allocation rate =Total overhead costs / Total allocation base used
36 =D30/D31
37
38 Overhead Assigned Activity Driver(Direct Labor Hours) Plantwide Overhead rate = Total overhead cost
39 Product A =D25 × =D36 = =D39*F39
40 Product B =D26 × =D36 = =D40*F40
41
42
43
44 Overhead Assigned Activity Driver Plantwide Overhead rate Total Overhead cost Units Produced OH cost per unit
45 Product A =D39 =F39 =D45*E45 =D4 =F45/G45
46 Product B =D40 =F40 =D46*E46 =E4 =F46/G46
47
48
49 Calculation of Total production cost per unit:
50
51 Product A Product B
52 Direct Materials cost per unit =D6 =E6
53 Direct Labour cost per unit =D5*D8 =E5*D8
54 Overhead cost per unit =H45 =H46
55 Total product cost per unit =SUM(D52:D54) =SUM(E52:E54)
56
57
58 2)
59 Market Price of Product A 25.07
60 Market Price of Product B 57
61
62 Product A Product B
63 Market Price per unit =D59 =D60
64 Total production cost per unit =D55 =E55
65 Profit (loss) per unit =D63-D64 =E63-E64
66
67
68 3)
69
70 Using the following data:
71 Activity Overhead costs Allocation Base
72 Machine Setup =D11 Number of Setups
73 Materials Handling =D12 Number of parts required
74 Quality Control =D13 Inspection hours required
75
76
77 Resources used Product A Product B Total
78 Number of Setups 5 24 =SUM(D78:E78)
79 Number of parts required =8*D4 =8*E4 =SUM(D79:E79)
80 Inspection hours required 48 220 =SUM(D80:E80)
81
82 Overhead allocation rate can be calculated as follows:
83
84
85
86
87
88 Activity Total Budgeted cost ÷ Total Expected Use of allocation base = Allocation Rate
89 =C72 =D72 ÷ =F78 = =D89/F89
90 =C73 =D73 ÷ =F79 = =D90/F90
91 =C74 =D74 ÷ =F80 = =D91/F91
92
93
94 Hence activity rate are as follows:
95
96 Activity Activity Rate
97 =C89 =H89 Per Setup
98 =C90 =H90 per part
99 =C91 =H91 per hours
100
101
102 Given the following uses of activities:
103 Resources used Product A Product B Total
104 =E72 =D78 =E78 =D104+E104
105 =E73 =D79 =E79 =D105+E105
106 =E74 =D80 =E80 =D106+E106
107
108
109
110 Activity Rate × Activity Driver = Allocated costs
111 Product A
112 Number of service requests =H89 × =D104 = =D112*F112
113 Number of bids =H90 × =D105 = =D113*F113
114 Number of customer design changes =H91 × =D106 = =D114*F114
115 Total Overhead cost =SUM(H112:H114)
116
117 Predetermined Rate × Resources required = Allocated costs
118 Product B
119 Number of service requests =D97 × =E104 = =D119*F119
120 Number of bids =D98 × =E105 = =D120*F120
121 Number of customer design changes =D99 × =E106 = =D121*F121
122 Total Overhead cost =SUM(H119:H121)
123
124 Customers Product A Product B
125 Total overhead cost applied =H115 =H122
126 Total number of units produced =D4 =E4
127 Overhead cost per unit =D125/D126 =E125/E126
128
129 Calculation of total manufacturing cost
130
131 Customers Product A Product B
132 Direct Materials per unit =D52 =E52
133 Direct Labor per unit =D53 =E53
134 Overhead per unit =D127 =E127
135 Total Production Cost per unit =SUM(D132:D134) =SUM(E132:E134)
136
137 4)
138
139 Market Price of Product A 25.07
140 Market Price of Product B 57
141
142 Product A Product B
143 Market Price per unit =D139 =D140
144 Total production cost per unit =D135 =E135
145 Profit (loss) per unit =D143-D144 =E143-E144
146
147
148 4.2)
149
150 Using ABC costing it can be seen that the product B is being sold at loss.
151 This will help management to price the product B better.
152 Hence the above information will influence the company’s strategy.
153
154
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