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. Quantity 750 Process Activity Changeover Machining Overhead Cost Driver Number of batches Components 438,750 391,527 Machine hours 8,530 Number of setups Setups 182,e0e 108 $1,012,277 Welding Inspecting Rework Finishing Welding hours Number of ins pections Rework orders 266,240 5,200 848 302,400 148 35,70e 684, 34e Support Purchasing Providing space Providing utilities Purchase orders 151,28e 30,900 488 Number of units 8,400 8,400 Number of units 124,500 306,680 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours 2,80e 1,80e 5.600 3,400 375 Batches 375 Number of inspections Machine hours 518 330 3,250 5,280 Setups Rework orders 5e 50 8e Бе Purchase orders 325 163 Requlred: 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 $200 for Model 145 and $111 for Model 212. 3. If the market price for Model 145 is $525.05 and the market price for Model 212 is $29270, determine the profit or loss per unit for each model Required 1 Required 2 Required 3 Using ABC, compute the overhead cost per unit for each product line, (Round vour final answers to 2 decimals places.) Model 145 Model 212 Activity driver incurred Overhead Activity driver incurred Overhead Expected Costs Expected Activity Activity Activity Rate assigned assigned Components 750 Number of batches Changeover 438,750 8,530 Machine hours Machining 391,527 100 Setups 182,000 Setups Finishing 5,200 Welding hours Welding 5 266,240 840 Inspections Inspecting 302.400 140 Rework orders Rework 35,700 Support 488 Purchase orders Purchasing 151,280 8,400 Units 155.400 Providing space and utilities Total overhead cost 5 5 Total units produced Overhead cost per unit Required 1 Required 2 > Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $200 for Model 145 and $111 for Model 212. (Round your final answers to 2 decimal places.) Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit If the market price for Model 145 is $525.05 and the market price for Model 212 is $292.70, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.) Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit Required 2 Required 3

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	438,750	750	Number of batches	585.00	per batch	375	219,375	375	219375
Machining	391,527	8,530	Machine hours	45.90	per machine hour	3,250	149,175	5,280	242352
Setups	182,000	100	Setups	1820.00	per setup	50	91,000	50	91000
Finishing
Welding	266,240	5,200	Welding hours	51.20	per welding hour	1800	92,160	3400	174080
Inspecting	302,400	840	Inspections	360.00	per inspection	510	183,600	330	118800
Rework	35,700	140	Rework orders	255.00	per rework order	80	20,400	60	15300
Support
Purchasing	151,280	488	Purchase orders	310.00	per purchase order	325	100,750	163	50530
Providing space and utilities	155,400	8,400	Units	18.50	per unit	2,800	51,800	5,600	103600
					Total overhead cost		908,260		1,015,037
					Total units produced		2,800		5,600
					Overhead cost per unit		324.38		181.26
2
	Model 145	Model 212
Materials and Labor per unit	200.00	111.00
Overhead	324.38	181.26
Total manufacturing cost	524.38	292.26
3
	Model 145	Model 212
Price per unit	525.05	292.70
Cost per unit	524.38	292.26
Profit(loss) per unit	0.67	0.44