Answer:
Tadros Company
Plantwide method:
                                                      Product A    Product B 
1.1. Manufacturing cost per unit         $40            $85
1.2 Gross profit per unit                      $15           $135
2.1 Gross profit per customer        $300           $675
2.2 Customer of customer to each customer is:
= $80
The gross profit is adequate for each customer.
ABC method:
                                                                  Product A    Product B 
3.1The Manufacturing cost per unit         $36.26         $101.61
3.2 Gross profit per unit                             $18.74         $118.39
4.1 Gross profit per customer                $374.85        $591.94
4.2 Cost of customer service  to each customer is $80. 
The Gross profit per customer is adequate.
5. The ABC product costing method gives better information to managers of Tadros Company.
c. Activity-based costing method                            
Explanation:
a) Data and Calculations:
                                              Product A                     Product B 
Direct materials                   $20 per unit                 $30 per unit 
Direct labor hours                0.5 DLH/unit                 1.5 DLH per unit 
Total direct labor hours       8,000 (0.5*16,000)       5,400 (1.5*3,600)
Direct labor costs                $160,000 ($20*8,000) $108,000 ($20*5,400)
Machine hours                     0.4 MH per unit            1.2 MH per unit 
Batches                                200 batches                 360 batches 
Volume                                16,000 units                  3,600 units 
Engineering modifications  20 modifications          80 modifications 
Number of customers         800 customers            720 customers 
Market price                        $55 per unit                 $220 per unit 
Direct labor rate  = $20 per direct labor hour (DLH). 
Overhead rates based:
a. Plantwide Method:
Total manufacturing overhead costs/Total direct labor hours
$268,000/13,400 = $20
Cost of production:
                                                        Product A        Product B
Direct materials per unit               $320,000         $90,000
Direct labor hours per unit DLH      160,000          108,000
Overhead costs                                160,000          108,000
Total production costs                  $640,000       $306,000
Volume                                          16,000 units     3,600 units 
Manufacturing cost per unit         $40                   $85
Income Statement:
                                                      Product A        Product B
Sales Revenue ($55 and $220)  $880,000      $792,000
Total production costs                   640,000        306,000
Gross profit                                  $240,000      $486,000
Volume                                       16,000 units     3,600 units
Gross profit per unit                       $15                $135
Gross profit                                  $240,000      $486,000
Customers                                  800 customers  720 customers
Gross profit per customer          $300              $675
b. Departmental Method:
c. ABC Method:
Additional information follows:
Cost Pools                     Overhead       Costs Driver
Indirect manufacturing
Engineering support      $ 53,600      Engineering modifications
Electricity                           53,600       Machine hours
Setup costs                      160,800       Batches
Nonmanufacturing
Customer service             121,600      Number of customers
Overhead rate using ABC:
Cost Pools                     Overhead       Costs Driver                    Rates
Indirect manufacturing
Engineering support      $ 53,600      100 modifications         = $536
Electricity                           53,600       10,720 Machine hours        $5
Setup costs                      160,800       560 Batches                   $287
Customer service             136,800      1,520 customers              $90
Cost of production:
                                                       Product A        Product B
Direct materials per unit              $320,000         $90,000
Direct labor hours per unit DLH     160,000          108,000
Overhead costs:
Engineering support                         10,720            42,880
Electricity                                          32,000            21,600
Setup costs                                      57,400          103,320
Total production costs                $580,120       $365,800
Volume                                        16,000 units     3,600 units 
Manufacturing cost per unit         $36.26        $101.61
Income Statement:
                                                      Product A        Product B
Sales Revenue ($55 and $220)  $880,000      $792,000
Total production costs                    580,120        365,800
Gross profit                                   $299,880     $426,200
Volume                                       16,000 units     3,600 units
Gross profit per unit                     $18.74           $118.39
Gross profit                              $299,880                   $426,200
Customers                               800 customers           720 customers
Gross profit per customer      $374.85                       $591.94
Total production costs             $580,120                   $365,800
Customers                               800 customers           720 customers
Cost per customer                  $725.15                       $508.06
Customer service costs
Customer service             $121,600/1,520 = $80