The Chromosome Manufacturing Company produces two products, X and Y. The company president, Gene Mutation, is concerned about the fierce competition in the market for product X. He notes that competitors are selling X for a price well below Chromosome's price of P12.70. At the same time, he notes that competitors are pricing product Y almost twice as high as Chromosome's price of P12.50. Mr. Mutation has obtained the following data for a recent time period: PRODUCT X PRODUCT Y Number of Units 11,000 3,000 Direct Materials Cost Per Unit 3.23 3.09 Direct Labor Cost Per Unit 2.22 2.10 Direct Labor Hours 10,000 2,500 Machine Hours 2,100 2,800 Inspection Hours 80 100 Purchase Orders 10 10 Mr. Mutation has learned that overhead costs are assigned to products on the basis of direct labor hours. The overhead costs for his time period consisted of the following items: Overhead Cost Item Amount Inspecting Costs 16,200 Purchasing Costs 8,000 Machine Cost 49,000 Total 73,200 Required: Using the direct labor hours to allocate overhead costs, determine the gross margin per unit or Product X and Y Using ABC, determine the gross margin per unit for Product X and Y
The Chromosome Manufacturing Company produces two products, X and Y. The company president, Gene Mutation, is concerned about the fierce competition in the market for product X. He notes that competitors are selling X for a price well below Chromosome's price of P12.70. At the same time, he notes that competitors are pricing product Y almost twice as high as Chromosome's price of P12.50.
Mr. Mutation has obtained the following data for a recent time period:
|
|
PRODUCT X |
PRODUCT Y |
|
Number of Units |
11,000 |
3,000 |
|
Direct Materials Cost Per Unit |
3.23 |
3.09 |
|
Direct Labor Cost Per Unit |
2.22 |
2.10 |
|
Direct Labor Hours |
10,000 |
2,500 |
|
Machine Hours |
2,100 |
2,800 |
|
Inspection Hours |
80 |
100 |
|
Purchase Orders |
10 |
10 |
Mr. Mutation has learned that
|
Overhead Cost Item |
Amount |
|
Inspecting Costs |
16,200 |
|
Purchasing Costs |
8,000 |
|
Machine Cost |
49,000 |
|
Total |
73,200 |
Required:
- Using the direct labor hours to allocate overhead costs, determine the gross margin per unit or Product X and Y
- Using ABC, determine the gross margin per unit for Product X and Y
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