Question

Exercise 17-7 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of alr 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. (Loss amounts should be Indicated with a minus sign. Round your Intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 810 7,720 40 Finishing 4,500 Welding Inspecting Rework Overhead Cost $ 458,000 308,400 220.500 $ 986,98€ $ 181.988 223,600 -61882 $ 466,70€ $ 135,588 31.750 60,930 $ 228.188 Welding hours Number of inspections Rework orders 765 180 Support Purchasing Providing space Providing utilities Purchase order's Number of units Number of units 579 6,000 6.000 Additional production Information concerning its two product lines follows. Model 212 4.600 3,198 Model 145 2.ece 1,400 405 455 2,320 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders des 319 5,488 90 380 98 190 Required: 1. Using a plantwide overhead rate based on machine hours, 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 5170 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 Model 145 Model 212 3. If the market price for Model 145 is $757 and the market price for Model 212 is $490, determine the profit or loss per unit for each model Model 145 Model 212 Market price

Answer 1

1
Overhead costs	1681780	217.85	per machine hour
Machine hours	7720
2
Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Model 145	2320	217.85	505412	2000	252.71
Model 212	5400	217.85	1176390	4000	294.10
Total manufacturing cost per unit:	Model 145	Model 212
Materials and Labor per unit	200.00	170.00
Overhead	252.71	294.10
Total manufacturing cost	452.71	464.10
3
	Model 145	Model 212
Market price	757.00	490.00
Manufacturing cost per unit	452.71	464.10
Profit(loss) per unit	304.29	25.90