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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

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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

(Solved Homework): 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…

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