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 Activity Components Changeover Overhead Cost Driver Quantity 527,050 391,998 376,000 $1,295,048 Number of batches Machine hours Number of setups 830 ,270 200 Machining Setups 273,500 290,400 37,500 601,400 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 5,000 880 150 Purchasing Providing space Providing utilities $196,170 30,100 90,860 317,130 Support Purchase orders Number of units Number of units 503 6,300 6,300

Answer 1

							Model 145		model 212
Activity		Expected	Expected activity		Activity rate		Activity	oh	Activity	oh
		costs					driver	assigned	driver	assigned
Components
Changeover		527,050	830	no batches	635	no batches	415	263525	415	263525
Machining		391,998	8,270	MH's	47.4	MH's	2,950	139830	5,320	252168
Setups		376,000	200	no setups	1880	no setups	100	188000	100	188000
Finishing
Welding		273,500	5,000	welding hrs	54.7	welding hrs	1,200	65640	3,800	207860
Inspecting		290,400	880	no inspections	330	no inspections	500	165000	380	125400
Rework		37,500	150	Re orders	250	Re orders	100	25000	50	12500
Support
Purchasing		196,170	503	pur orders	390	pur orders	335	130650	168	65520
providing space&yutilit		120,960	6,300	no units	19.2	no units	2,100	40320	4,200	80640
		2,213,578				total oh		1017965		1195613
						units produced		2,100		4,200
						oh cost per unit		484.75		284.67
				model 145	model 212
2)
	Materials and labor per unit			240.00	119.00
	overhead cost per unit			484.75	284.67
	total cost per unit			724.75	403.67
3)				model 145	model 212
	price per unit			725.34	403.98
	cost per unit			724.75	403.67
	profit(loss)per unit			0.59	0.31