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6. The following data are for the two products produced by Johan Company. Product A Product B P24 per unit 1.6 DLH per unit 1.2 MH per unit 225 batches 2,000 units 58 modifications 400 customers P120 per unit Direct materials Direct labor hours Machine hours Batches P15 per unit 0.3 DLH per unit 0.1 MH per unit 125 batches Volume Engineering modifications Number of customers Market price 10,000 units 12 modifications 500 customers P30 per unit The company's direct labor rate is P20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing: Engineering support Electricity Setup costs Nonmanufacturing: Customer service P24,500 Engineering modifications 34,000 Machine hours 52,500 Batches 81,000 Number of customers REQUIRED: 1. Compute the manufacturing cost per unit using the plant-wide 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 plant-wide overhead rate? How much gross profit is generated by each customer of Product B using the plant-wide 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? Explain why.

6. The following data are for the two products produced by Johan Company. Product A Product B P24 per unit 1.6 DLH per unit 1.2 MH per unit 225 batches 2,000 units 58 modifications 400 customers P120 per unit Direct materials Direct labor hours Machine hours Batches P15 per unit 0.3 DLH per unit 0.1 MH per unit 125 batches Volume Engineering modifications Number of customers Market price 10,000 units 12 modifications 500 customers P30 per unit The company's direct labor rate is P20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing: Engineering support Electricity Setup costs Nonmanufacturing: Customer service P24,500 Engineering modifications 34,000 Machine hours 52,500 Batches 81,000 Number of customers REQUIRED: 1. Compute the manufacturing cost per unit using the plant-wide 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 plant-wide overhead rate? How much gross profit is generated by each customer of Product B using the plant-wide 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? Explain why.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...
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6. The following data are for the two products produced by Johan Company. Product A Product B P15 per unit 0.3 DLH per unit 0.1 MH per unit 125 batches Direct materials P24 per unit 1.6 DLH per unit 1.2 MH per unit 225 batches 2,000 units 58 modifications Direct labor hours Machine hours Batches 10,000 units 12 modifications Volume Engineering modifications Number of customers Market price 500 customers 400 customers P30 per unit P120 per unit The company's direct labor rate is P20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing: Engineering support Electricity Setup costs Nonmanufacturing: Customer service P24,500 34,000 52,500 Engineering modifications Machine hours Batches 81,000 Number of customers REQUIRED: 1. Compute the manufacturing cost per unit using the plant-wide 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 plant-wide overhead rate? How much gross profit is generated by each customer of Product B using the plant-wide 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? Explain why.
Transcribed Image Text:6. The following data are for the two products produced by Johan Company. Product A Product B P15 per unit 0.3 DLH per unit 0.1 MH per unit 125 batches Direct materials P24 per unit 1.6 DLH per unit 1.2 MH per unit 225 batches 2,000 units 58 modifications Direct labor hours Machine hours Batches 10,000 units 12 modifications Volume Engineering modifications Number of customers Market price 500 customers 400 customers P30 per unit P120 per unit The company's direct labor rate is P20 per direct labor hour (DLH). Additional information follows. Costs Driver Indirect manufacturing: Engineering support Electricity Setup costs Nonmanufacturing: Customer service P24,500 34,000 52,500 Engineering modifications Machine hours Batches 81,000 Number of customers REQUIRED: 1. Compute the manufacturing cost per unit using the plant-wide 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 plant-wide overhead rate? How much gross profit is generated by each customer of Product B using the plant-wide 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? Explain why.
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