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Comparing costs using ABC with the plantwide overhead rate.
The following data are for the two products produced by Tadros Company.
Product AProduct B
Direct Materials$15 per unit$24 per unit
Direct Labor Hours0.3 DLH per unit1.6 DLH per unit
Machine Hours0.1 MH per unit1.2 MH per unit
Batches125 batches225 batches
Volume10,000 units2,000 units
Engineering modifications12 modifications58 modifications
Number of customers500 customers400 customers
Market price$30 per unit $120 per unit
The company’s direct labor rate is $20 per direct labor hour (DLH). Additional information follows.
CostsDriver
Indirect manufacturing
Engineering support$24,000Engineering modifications
Electricity 34,000Machine hours
Setup costs 52,500Batches
Nonmanufacturing
Customer service81,000Number of customers
Required
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