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	Overhead Cost				Driver	Quantity
Components	Changeover		$	476,150		Number of batches	890
	Machining			366,275		Machine hours	8,050
	Setups			190,000		Number of setups	100
			$	1,032,425
Finishing	Welding		$	286,380		Welding hours	4,300
	Inspecting			258,300		Number of inspections	820
	Rework			51,300		Rework orders	180
			$	595,980
Support	Purchasing		$	189,600		Purchase orders	480
	Providing space			30,700		Number of units	6,300
	Providing utilities			89,000		Number of units	6,300
			$	309,300

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		2,100			4,200
Welding hours		1,000			3,300
Batches		445			445
Number of inspections		480			340
Machine hours		2,750			5,300
Setups		50			50
Rework orders		80			100
Purchase orders		320			160

Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.)

Model 145 Model 212 Activity Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Components Changeover $476,150 890 Number of batches Machining 366,275 8,050 Machine hours Setups 190,000 100 Setups Finishing Welding $286,380 4,300 Welding hours Inspecting 258,300 820 Inspections Rework 51,300 180 Rework orders Support Purchasing $189,600 480 Purchase orders Providing space and utilities 119,700 6,300 Units Total overhead cost Total units produced Overhead cost per unit

Answer 1

						Model 145		Model 212
Activity	Expected Costs	Expected Activity		Activity Rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Components
Changeover	476,150	890	Number of batches	535.00	per batch	445	238,075	445	238075
Machining	366,275	8,050	Machine hours	45.50	per machine hour	2,750	125,125	5,300	241150
Setups	190,000	100	Setups	1900.00	per setup	50	95,000	50	95000
Finishing
Welding	286,380	4,300	Welding hours	66.60	per welding hour	1000	66,600	3300	219780
Inspecting	258,300	820	Inspections	315.00	per inspection	480	151,200	340	107100
Rework	51,300	180	Rework orders	285.00	per rework order	80	22,800	100	28500
Support
Purchasing	189,600	480	Purchase orders	395.00	per purchase order	320	126,400	160	63200
Providing space and utilities	119,700	6,300	Units	19.00	per unit	2,100	39,900	4,200	79800
					Total overhead cost		865,100		1,072,605
					Total units produced		2,100		4,200
					Overhead cost per unit		411.95		255.38