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	Overhead Cost				Driver	Quantity
Components	Changeover		$	512,050		Number of batches	770
	Machining			354,768		Machine hours	7,780
	Setups			75,400		Number of setups	40
			$	942,218
Finishing	Welding		$	394,060		Welding hours	6,100
	Inspecting			266,500		Number of inspections	820
	Rework			32,250		Rework orders	150
			$	692,810
Support	Purchasing		$	191,660		Purchase orders	518
	Providing space			30,600		Number of units	6,300
	Providing utilities			90,360		Number of units	6,300
			$	312,620

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		2,100			4,200
Welding hours		2,600			3,500
Batches		385			385
Number of inspections		510			310
Machine hours		2,450			5,330
Setups		20			20
Rework orders		100			50
Purchase orders		345			173

  
Required:
1. Using ABC, 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 $190 for Model 145 and $122 for Model 212.
3. If the market price for Model 145 is $632.85 and the market price for Model 212 is $365.00, determine the profit or loss per unit for each model.

3. If the market price for Model 145 is $632.85 and the market price fo each model Complete this question by entering your answers in the tabs bele Required 1 Required 2 Required! If the market price for Model 145 is $632.85 and the market price for Mode unit for each model. (Round your final answers to 2 decimal places.) Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit < Required 2

Answer 1

Required:1 Expected Costs Expected Activity Activity Rate Model 145 Model 212 Activity Drive incurred Overhead assigned Activity Drive incurred Overhead assigned 5120501 354768 75400 770 Number of batches 7780 Machine hours 40 Number of setups 665.00 Per batch 45.60 Per Machine hour 1885.00 Per Setup 385 2450 20 256025 111720 37700 385 5330 20 256025 243048 377001 Activity Components: Change over Machining Setups Finishing: Welding Inspecting Rework Support: Purchasing Provide utilities 394060 266500 32250 6100 Welding hours 820 Number of inspections 150 Rework orders 64.60 Per Welding hour 325.00 Per Inspection 215.00 Per rework order 2600 510 100 167960 165750 21500 3500 310 50 226100 100750 10750 1916601 120960 518 Purchase orders 6300 Number of units 345 2100 173 4200 370.00 Per Purchase order 19.20 Per unit Total over head cost Total units produced Over head cost per unit 127650 40320 928625 2100 442.20 64010 80640 1019023 4200 242.62

Required:2 Materials and labor per unit Over head per unit Total cost Model 145 Model 212 190.00 122.00 442.20 242.62 632.200 364.62 Required :3 Price per unit Cost per unit Profit (loss) Per Unit Model 145 632.85 632.20 0.65 Model 212 365.00 364.62 0.38