Question

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Components Changeover Machining Setups Quantity 890 7,620 160 Finishing Welding Inspecting Rework Overhead Cost Driver $ 452,000 Number of batches 300, 200 Machine hours 226,000 Number of setups $ 978, 200 $ 182,300 Welding hours 225,000 Number of inspections 60,750 Rework orders $ 468,050 $ 135,000 Purchase orders 30, 600 Number of units 60,070 Number of units $ 225,670 5,100 740 140 Support Purchasing Providing space Providing utilities 563 4,500 4,500 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 1,500 1,600 445 490 2,270 80 Model 212 3,000 3,500 445 250 5,350 80 50 188 375

Answer 1

Plantwide Overhead Rate= Estimated Overhead/ Estimated Machine Hour

=(978200+468050+225670)/(2270+5350)=$219.41

Overhead	Activity Driver	plantwide OH Rate	Total Overhead Cost	Unit produced	Overhead Cost per Unit
Model 145	2270	$219.41	$498,065.47	1,500	$332.04
model 212	5,350	$219.41	$1,173,854.74	3,000	$391.28

Part-2
Computation of Per unit Cost
Particulars	Model 145	Model 212
Direct material and labor	$180.00	$120.00
Overhead cost per unit	$332.04	$391.28
Cost per unit	$512.04	$511.28
Solution 3:
Part-3
Computation of Profit (Loss) per unit
Particulars	Model 145	Model 212
Market Price Per Unit	$740.00	$510.00
Less: Cost per Unit	$512.04	$511.28
Profit (Loss) per unit	$227.96	($1.28)