Question

Ch 17 Homework W 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 selvity Quantity Components 730 Changeover Machining Setups Driver Number of batches Machine hours Number of setups 8,170 Finishing welding Inspecting Rework • 19 f. erhead Cost $ 456,250 385.624 144,400 986,224 $320,960 267,750 46.200 $ 634,910 194,250 30,700 61.460 welding hours Number of inspections Rework orders 5,900 850 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 4,00 4.800 Additional production information concerning its two product lines follows Model 212 3,200 Units produced welding hours Batches Number of Inspections 1,600 2.000 365 365 2,50 5,320 Sets Rework onders Purchase orders 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 $230 for Model 145 and $115 for Model 212 3. If the market price for Model 145 i 5788 04 and the market price for Model 212 15 543291, determine the promit or loss per unit for each model

Answer 1

Answer 1. Activity Expected Costs Expected Activity Activity Rate Model 145 Activity Overhead driver incurred assigned Model 212 Activity Overhead driver incurred assigned 456250 385624 144400 730 number of batches 8170 machine hours 80 setups 625.00 per batch 47.20 per machine hour 1805.00 per setup 365 2850 40 228125 134520 72200 365 5320 40 228125 251104 72200 Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 320960 267750 462001 5900 welding hours 850 inspections 210 rework ordeers 54.40 per welding hour 315.00 per inspection 220.00 per rework order 2000 520 110 108800 163800 24200 3900 330 100 212160 103950 22000 | _350 194250 92160 525 purchase orders 4800 units 175 3200 1600 370.00 per purchase order 19.20 per unit Total overhead costs Total units produced Overhead cost per unit 129500 30720 891865 1600 557.42 64750 61440 1015729 3200 317.42 Answer 2. Materials and labor per unit Overhead cost per unit Total cost per unit Model 145 Model 212 230.00 115.00 557.42 317.42 787.42 432.42 Answer 3. Price per unit Cost per unit Profit (loss) per unit Model 145 Model 212 | 788.04432.91 787.42 432.42 0.62 0.49