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. (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 Quantity 770 7,680 20 Finishing Welding Inspecting Rework Overhead Cost Driver $451,000 Number of batches 301,400 Machine hours 227,500 Number of setups $979,900 $182,600 Welding hours 226,000 Number of inspections 61,000 Rework orders $469,600 $137,000 Purchase orders 30,800 Number of units 60,450 Number of units $228,250 4,100 865 210 Support Purchasing Providing space Providing utilities 458 5,400 5,400 Additional production information concerning its two product lines follows. Model 145 1,800 Model 212 3,600 3,100 385 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 1,000 385 525 2,330 10 140 305 340 5,350 70 153

Answer 1

Solution:

Predetermined Overhead Rate
Overhead cost	$16,77,750	$218.46	Per DLH
/Machine hours	7680
Overhead assigned	Activity Driver	Plant wide OH Rate	Total Overhead Cost	Units produced	OH Cost per unit
Model 145	2330	$218.46	$5,09,012	1800	$282.78
Model 212	5350	$218.46	$11,68,761	3600	$324.66
		Model 145	Model 212
Direct Materials and direct labor		$300.00	$170.00
Overhead cost		$282.78	$324.66
Total Product cost per unit		$582.78	$494.66
		Model 145	Model 212
Market Price		$736.00	$440.00
Total Product cost per unit		$582.78	$494.66
Grosss profit		$153.22	-$54.66