Reference no: EM132940824

Question - 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	P3.23	P3.09
Direct Labor cost per unit	P2.22	P2.10
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

Inspection Costs P16,200

Purchasing Costs 8,000

Machine Cost 49,000

Total P73,200

Required -

1. Using the direct labor hours to allocate overhead costs, determine the gross margin per unit or Product X and Y?

2. Using ABC, determine the gross margin per unit for Product X and Y?