Question

Way Cool produces two different models of air conditoners. 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 Components Changeover Machining Setup 120 Overhead Driver Quantity Cost Number of $500,000 800 batches 279,000 Machine hours 6,000 225,000 Number of setups $1,004,000 $ 180, 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 Finlahing Welding Inspecting Rework Support Purchasing Providing прае Providing utiliser 65,000 Number of units 5,000 $ 232,000 Additional production Information concerning its two product lines follows. 300 Model 145 Model 212 1,500 3.500 2 200 400 400 300 1,800 4.200 60 60 160 140 300 150 Units produced Welding hours Batchen Number of inspections Machine hours Setups Rework orders Purchase orders 400 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 of the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212 3. If the market price for Model 145 is $820 and the market price for Model 212 s $480, determine the profit or loss per unit for each model Complete this question by entering your answers in the tabs below. Required Required Required Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.)

Answer 1

Expected cost (A) Activity Expected Activity (B) Model 145 Activity Overhead driver Assigned incurred Activity Rate (A/B) Model 212 Activity Overhead driver Assigned incurred $ $ $ 500,000 279,000 225,000 800 No. of batches 6000 Machine hours 120 No. of Setups $ $ $ 625.00 46.50 1,875.00 400 $ 1800 $ 60 $ 250,000 83,700 112,500 400 $ 4200 $ 250,000 195,300 112,500 Components Change over Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing Space and Uitilities $ $ $ 180,300 210,000 75,000 3000 Welding hours $ 700 No. of Inspections $ 300 Rework orders $ 60.10 300.00 250.00 800 $ 400 $ 160 $ 48,080 120,000 40,000 2200 $ 300 $ 140 $ 132,220 90,000 35,000 $ $ 135,000 97,000 450 Purchase orders 5000 No. of Units $ $ 300.00 19.40 300 $ 1500 $ 90,000 29,100 150 $ 3500 $ 45,000 67,900 $ 773,380 927,920 Total Overhead Cost Total Units Produced Overhead Cost per Unit 1500 3500 $ 515.59 $ 265.12 Overhead assigned = Actvity driver incurred * Activity Rate Overhead cost per Unit = Total Overhead cost / Units produced Overhead cost of providing space and utilities = $ 32000+$65000= $ 97000. Note: Activate Window

Computation of Total Cost per Unit Material & Labour per Unit Overhead cost per Unit Total Cost PerUnit Model 145 $ 250.00 $ $ 515.59 $ $ 765.59 $ Model 212 180.00 265.12 445.12 Computation of Profit Loss Price per Unit Less Cost per Unit Profit (Loss) per Unit Model 145 Model 212 $ 820.00 $ 480.00 $ (765.59) $ (445.12) $ 54.41 $ 34.88