Question

Ch. 17 Quiz Help Saved 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 Activity Components Changeover Overhead Cost Driver Quantity Machining Setups $465,750 380,786 110.100 Number of batches Machine hours Number of setups 810 8,260 60 $956,636 $294,000 328,500 42,000 $664,500 $ 181,050 30,200 36,400 $247,650 4,900 900 140 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 510 3,600 3,600 Support Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 1,200 1,000 405 500 2,950 30 90 340 2,400 3,900 405 400 5,310 30 50 170 Required

Answer 1

Answers

• Requirement 1

						Model 145		Model 212
Activity	Expected Costs	Expected Activity		Activity Rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Components
Changeover	$      465,750.00	810	Number of batches	$                 575.00	per Number of batches	405	$        232,875.00	405	$      232,875.00
Machining	$      380,786.00	8,260	Machine hours	$                   46.10	per Machine hours	2,950	$        135,995.00	5,310	$      244,791.00
Setups	$      110,100.00	60	Setups	$             1,835.00	per Setups	30	$          55,050.00	30	$        55,050.00
Finishing
Welding	$      294,000.00	4,900	Welding hours	$                   60.00	per Welding hours	1,000	$          60,000.00	3,900	$      234,000.00
Inspecting	$      328,500.00	900	Inspections	$                 365.00	per Inspections	500	$        182,500.00	400	$      146,000.00
Rework	$         42,000.00	140	Rework orders	$                 300.00	per Rework orders	90	$          27,000.00	50	$        15,000.00
Support
Purchasing	$     181,050.00	510	Purchase orders	$                 355.00	per Purchase orders	340	$        120,700.00	170	$        60,350.00
Providing space and utilities	$         66,600.00	3,600	Units	$                   18.50	per Units	1,200	$          22,200.00	2,400	$        44,400.00
					Total overhead cost		$        836,320.00		$ 1,032,466.00
					Total units produced		1,200		2,400
					Overhead cost per unit		$                696.93		$              430.19

• Requirement 2

	Model 145	Model 212
Materials and Labor per unit	$               210.00	$          115.00
Overhead cost per unit	$               696.93	$          430.19
Total cost per unit	$               906.93	$          545.19

• Requirement 3

	Model 145	Model 212
Price per unit	$               907.56	$          545.53
Cost per unit	$               906.93	$          545.19
Profit (loss) per unit	$                   0.63	$               0.34