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. (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 Overhead Cost Driver $ 458,500 Number of batches 301,400 Machine hours 226,000 Number of setups $ 985,900 Quantity 730 7,640 40 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 5,200 840 230 $ 181,100 234,000 60,400 $ 475,500 $ 137,500 31,850 60,720 $ 230,070 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 525 6,300 6,300 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 2,100 2,000 365 515 2,340 Model 212 4,200 3,200 365 325 5,300 20 80 175 20 150 350

Answer 1

1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line
Overhead costs	$1691470	$221.40	Per machine hour
Machine Hours	7640
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 $180 for Model 212
Overhead Assigned	Activity Driver	Plantwide Overhead Rate	Total Overhead cost	Units Produced	OH cost per unit
Model 145	2340	$221.40	$518076	2100	$246.70
Model 212	5300	$221.40	$1173420	4200	$279.39
Total Manufacturing cost per unit:		Model 145	Model 212
Materials & Labor		$200	$180
Overhead		$246.70	$279.39
Total Manufacturing cost		$446.70	$459.39
3. If the market price for Model 145 is $756 and the market price for Model 212 is $480, determine the profit or loss per unit for each model
		Model 145	Model 212
Market Price		$756	$480
Manufacturing cost per unit		($446.70)	($459.39)
Profit (Loss) per unit		$309.30	$20.61

Total overhead cost = $985900 + $475500 + $230070 = $1691470

Total Machine hours = 2340 + 5300 = 7640