Question

way Cool produces two different models of all 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. (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 Componente Changeover Machining Setups Overhead Driver Cost Quantity Number of $ 500,000 BOO batches 279,000 Machine hours 6,000 225,000 Number of 120 setups $1.000.000 100,300 Welding hours 3,000 Number of 210,000 700 inspections 75,000 Rework orders 300 $ 465.300 $ 135,000 Purchase orders 450 32,000 Number of units 5,000 Finishing Welding Inspecting Rework Support Purchasing Providing space Providing utilities Number of units 5,000 65,000 232,000 $ Additional production Information conceming its two product Ines follows. Units produced Welding hours Batches Number o inspections Machine hours Setups Rework orders Purchase orders Model 145 Model 212 1,500 3.500 800 2,200 400 400 300 1,800 4,200 400 140 160 300 150

Answer 1

Way Cool 1. Using ABC, compute the overhead cost per unit for each product line. Model 145 Model 212 Activity driver Overhead Activity driver Overhead incurred assigned incurred assigned Expected Costs Expected Activity Activity Rate 500000 279000 225000 800 6000 120 Number of batches Machine hours Setups 625.00 per batch 46.50 per machine hour 1875.00 per setup 400 1800 60 250000 83700 112500 400 4200 60 250000 195300 112500 Activity Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 180300 210000 75000 3000 Welding hours 700 Inspections 300 Rework orders 60.10 per welding hour 300.00 per inspection 250.00 per rework order 800 400 160 48080 120000 40000 2200 300 140 132220 90000 35000 135000 97000 450 5000 Purchase orders Units 300 1500 150 3500 300.00 per purchase order 19.40 per unit Total overhead cost Total units produced Overhead cost per unit 90000 29100 773380 1500 515.59 45000 67900 927920 3500 265.12

2.Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $190 for Model 212. Materials and Labor per unit Overhead per unit Total cost per unit Model 145 250 515.59 765.59 Model 212 180 265.12 445.12 3.If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. Price per unit Cost per unit Profit (loss) per unit Model 145 820 765.59 54.41 Model 212 480 445.12 34.88