Question

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their 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 Components Activity Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 930 8,180 60 Finishing Welding Inspecting Rework Overhead Cost $ 674,250 383,642 111,309 $1,169,192 $ 296, 380 315.000 66,700 $ 678,080 $ 168,300 30,700 47,420 $ 246.420 Welding hours Number of inspections Rework orders 5,800 840 230 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 510 4,200 4,280 Additional production information concerning its two product lines follows. Model 145 1,400 1,800 Model 212 2,809 4,000 465 465 Units produced welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 480 2,850 5,330 150 Required: 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $240 for Model 145 and $113 for Model 212 3. If the market price for Model 145 is $940.64 and the market price for Model 212 is $511.17, determine the profit or loss per unit for each model Complete this question by entering your answers in the tabs below.

Answer 1

Required:1 Model 145 Model 212 Activity Drive incurred Overhead assigned Activity Drive incurred Overhead assigned Expected Activity Expected Costs Activity Activity Rate Components: 930 Number of batches 337125 249977 725.00 Per batch Change over 674250 337125 465 465 8180 Machine hours 60 Number of setups 133665 46.90 Per Machine hour 5330 Machining 2850 383642 1855.00 Per Setup 55650 Setups 111300 30 30 55650 Finishing: 5800 Welding hours 840 Number of inspections 230 Rework orders 51.10 Per Welding hour 375.00 Per Inspection 204400 Welding 296380 91980 1800 4000 480 135000 Inspecting 180000 315000 360 43500 Rework 290.00 Per rework order 150 66700 80 23200 Support: 510 Purchase orders 4200 Number of units 330.00 Per Purchase order 18.60 Per unit Purchasing 168300 340 112200 170 56100 1400 26040 Provide utilities 52080 78120 2800 Total over head cost Total units produced Over head cost per unit 1113532 980160 2800 1400 397.69 700.11

Required :2 Model 145 Model 212 Materials and labor per unit Over head per unit 240.00 113.00 700.11 397.69 940.11 Total cost 510.69 Required:3 Model 145 Model 212 Price per unit Cost per unit 940.64 511.17 940.11 510.69 0.48 Profit (loss) Per Unit 0.53