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 Process Activity Components Changeover Machining Setups Quantity 800 6,000 120 Finishing Welding Inspecting Rework Overhead Cost Driver $ 500,000 Number of batches 279,000 Machine hours 225,000 Number of setups $1,004,000 $ 180, 300 Welding hours 210,000 Number of inspections 75,000 Rework orders $ 465,300 $ 135,000 Purchase orders 32,000 Number of units 65,000 Number of units $ 232,000 3,000 700 300 Support Purchasing Providing space Providing utilities 450 5,000 5,000

Answer 1

Answer 1. Activity Expected Costs Expected Activity Activity Rate Model 145 Activity | Overhead driver assigned incurred Model 212 Activity Overhead driver assigned incurred 500000 279000 225000 800 number of batches 6000 machine hours 120 setups 625.00 per batch 46.50 per machine hour 1875.00 per setup 400 1800 60 250000 83700 112500 400 4200 60 250000 195300 112500 Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 2200 180300 210000 75000 3000 welding hours 700 inspections 300 rework ordeers 60.10 per welding hour 300.00 per inspection 250.00 per rework order 800 400 160 48080 120000 40000 300 140 132220 90000 35000 | 135000 97000 450 purchase orders 5000 units 300 1500 150 3500 300.00 per purchase order 19.40 per unit Total overhead costs Total units produced Overhead cost per unit 90000 29100 773380 1500 515.59 45000 67900 927920 3500 265.12 Answer 2. Materials and labor per unit Overhead cost per unit Total cost per unit Model 145 Model 212 250.00 180.00 515.59 265.12 765.59 445.12 Answer 3. Price per unit Cost per unit Profit (loss) per unit Model 145 Model 212 820.00 480.00 765.59 445.12 54.41 34.88