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 Components Changeover Machining Setups Quantity 830 8,310 180 4.700 Finishing Welding Inspecting Rework Overhead Cont Driver $ 468,950 Number of batches 385,584 Machine hours 337,500 Number of setups $1, 192,034 309,260 Welding hours 315,000 Number of inspections 57,750 Rework orders $ 682,010 $ 153, 115 Purchase orders 31,100 Number of units 58.180 Number of units $ 242,695 875 210 Support Purchasing Providing space Providing utilities 503 4, 800 4,500

Answer 1

Answer 1:

Model 145 Model 212 Activity driver Overhead assigned Activity driver Overhead incurred Activity Expected cost Expected activity Activity Rate assigned incurred Components 830 Number of batches 8,310 Machine hours 415 $234,475.00 $468,950 $565.00 $234,475.00 Changeover Machining 415 2,950 $136,880.00 $385,584 $46.40 $248,704.00 5,360 $1,875.00 $337,500 180 Setups $168,750.00 $168,750.00 Setups 90 90 Finishing Welding 1,600 $105,280.00 475 $171,000.00 4,700 welding hours 875 Inspections 210 Rework orders $309,260 $65.80 $203,980.00 3,100 $315,000 $360.00 $144,000.00 Inspecting 400 $57,750 $275.00 $44,000.00 $13,750.00 Rework 160 50 Support 335 $102,175.00 503 Purchase orders $153,415 $305.00 $51,240.00 Purchasing 168 4,800 Units $59,520.00 $1,124,419.00 $89,280 $18.60 $29.760.00 Providing space and utilities 1,600 3,200 Total overhead cost $992,320.00 Total units produced 1,600 3,200 Overhead cost per unit $620.20 $351.38

Above excel with 'show formula' is as below:

B Н Model 145 Model 212 1 Expected cost Expected activity Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Activity Rate Activity 3 Components Changeover Machining 830 Number of batches =B4/C4 |=B5/C5 =B6/C6 468950 415 =G4*E4 415 =14*E4 4 8310 Machine hours =G5*E5 =15*E5 5360 5 385584 2950 180 Setups |=G6*E6 337500 90 90 =16*E6 6. Setups 7 Finishing |=B8/C8 |=B9/C9 =B10/C10 =18*E8 4700 Welding hours 875 Inspections 210 Rework orders Welding 309260 1600 =G8*E8 3100 =19*E9 =G9*E9 315000 475 400 Inspecting 50 Rework 57750 =G10*E10 =110*E10 10 160 11 Support 503 Purchase orders =B12/C12 =B13/C13 Purchasing Providing space and utilities 89280 153415 335 =G12*E12 =|12*E12 12 168 |=G13*E13 4800 Units 1600 =113*E13 3200 13 |=SUM(H4:H13) 1600 Total overhead cost |=SUM(J4:J13) 14 Total units produced Overhead cost per unit 3200 15 |=ROUND(H14/H15,2) |=ROUND(J14/J15,2) 16 17

Answer 2:

Model 145 Model 212 Matearila and labor cost per unit $190.00 $113.00 Overhead cost per unit $620.20 $351.38 Total cost per unit $810.20 $464.38

Answer 3:

Model 145 Model 212 Price per unit $810.84 $464.72 $810.20 $0.64 $464.38 Cost per unit Profit (loss) per unit $0.34