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. bits Quantity 830 Process Activity Components Changeover Machining Setups Skipped 8.640 200 Finishing eBook Welding Inspecting Rework Overhead Cost Driver $ 456,000 Number of batches 303,000 Machine hours 234,000 Number of setups $993.000 $ 192,000 Welding hours 234.000 Number of inspections 63.500 Rework orders $ 489,500 $ 145,000 Purchase orders 35,500 Number of units 70.000 Number of units $ 250, 500 4,500 810 260 Print Support Purchasing Providing space Providing utilities 459 4.910 4.910 References

Answer 1

1.

Components Department
Total Departmental Overhead	$ 9,93,000.00	$            114.93	per machine hour
Total Machine hours	8640
Finishing Department
Total Departmental Overhead	$ 4,89,500.00	$            108.78	per welding hour
Total Welding hours	4500
Support Department
Total Departmental Overhead	$ 2,50,500.00	$            545.75	per purchase order
Total Purchase Orders	459
Model 145	Activity Driver	Departmental OH rate	Total Overhead Cost
Components	3350	$            114.93	$          3,85,017
Finishing	1200	$            108.78	$          1,30,533
Support	306	$            545.75	$          1,67,000
Total Overhead			$         6,82,550
Units			1800
Overhead cost per unit			$             379.19
Model 212	Activity Driver	Departmental OH rate	Total Overhead Cost
Components	5290	$            114.93	$          6,07,983
Finishing	3300	$            108.78	$          3,58,967
Support	153	$            545.75	$             83,500
Total Overhead			$       10,50,450
Units			3110
Overhead cost per unit			$             337.77

2.

	Model 145	Model 212
Material and labor per unit	$          190.00	$            170.00
Overhead cost per unit	$          379.19	$            337.77
Total Cost per unit	$          569.19	$            507.77

3.

	Model 145	Model 212
Market price per unit	$       1,625.00	$            290.00
Cost per unit	$          569.19	$            507.77
Profit (Loss) per unit	$       1,055.81	$          -217.77