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

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

Required:Compute the manufacturing cost per unit using the plantwide overhead rate based on direct labor hours.

$2\mathrm{.}1$ How much gross profit is generated by each customer of Product A and Product $B$ using the plantwide overhead rate? Gross profit per customer

$2\mathrm{.}2$ What is the cost of providing customer service to each customer?

Is the gross profit adequate for each customer of Product A and $B$ using the plantwide overhead rate?

$3\mathrm{.}1$ Determine the manufacturing cost per unit of each product line using ABC. $3\mathrm{.}2$ What is the gross profit per unit?

$4\mathrm{.}1$ How much gross profit is generated by each customer of Product A and Product $B$ using ABC $?$

$4\mathrm{.}2$ Is the gross profit adequate for each customer of Product A and $B$ using ABC $?$

Which method of product costing gives better information to managers of this company?

Method of product costing for better information

Product A Product B

Direct materials $ $15$ per unit $ $25$ per unit

Direct labor hours $0\mathrm{.}5$ DLH per unit $1\mathrm{.}5$ DLH per unit

Machine hours $0\mathrm{.}4$ MH per unit $1\mathrm{.}2$ MH per unit

Batches $200$ batches $360$ batches

Volume $16,000$ units $3,600$ units

Engineering modifications $12$ modifications $88$ modifications

Number of customers $800$ customers $720$ customers

Market price $ $55$ per unit $ $220$ per unit

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

Costs Driver

Indirect manufacturing

Engineering support $ $53,600$ Engineering modifications

Electricity $53,600$ Machine hours

Setup costs $160,800$ Batches

Nonmanufacturing

Customer service $129,200$ Number of customers

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