Question

Exercise 4-7 Using the plantwide overhead rate to assess prices LO P1 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.) Quantity 710 Process Activity Components Changeover Machining Setups 7.770 220 Pinishing 3,700 Welding Inspecting Rework Overhead Cost Driver $ 459,000 Number of batches 301,600 Machine hours 229,000 Number of setups $ 989,600 $ 182,400 Welding hours 233,000 Number of inspections 61,000 Rework orders $ 476,400 $ 135,000 Purchase orders 31,700 Number of units 60,200 Number of units $ 226,900 765 210 Support Purchasing Providing space Providing utilities 480 4,200 4,200 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 1,400 1,200 355 500 2.320 110 90 320 Model 212 2.800 2.500 355 265 5.450 110 120 160

Answer 1

Arwant Page: No O o plants wide marubacturing overhead crate Estimated total manubacturing overheads = components total overhead cost + Finishing total overhead corf + support total overhead cost = 989,600 + 446,400+ 226,900 = $1,693,900 Frofimated fot al machine hours = 7,440 Led Khme hulbacheri Plantwide manubacturing overhead rate a fost -ng overheads Estimated total machine hrs 1692900 7,770 = 214.876 214.88 how | ...plant wide manub acturing overhead crate = $217,88 per mochir

Page No ④ For model 145, dised labor e disect material cost per vnit - $ 240 medej wia, direct labor & disech material cost per unit - $ 200 Overhead coat pour unit Activity Plant wide Total: Product Driver OH rate overhead cost produced cost per unit Model 145 2320 $214.88 $505482 1400 $361.06 WANN units OH Cmachine bouys) C per prachubehy) Model 012 5450 $214.88 $1187446 2800 $404.09 Total overhead cosf - Activity driver X Plant wide OH rate OH cost per unit = Total overhead cost x unito produced Total conte per unit Model 145 Model 212 Direct materiale direct labor cost $ 240 $ 200 per unit $424009 Overhead cost per unit Total cost per unit $361.06 $ 601.06 1 $624.09

Page: No ③ © Profit margin Model 145, Market price = $ 738 Model Qla, Market price = $500 Market price per unit Total cost per unit Profit margin per unit Product Model 145 | Model 212 1$438 $ 500 ($601.06) ($624.09) $136.94 $124.09)