Question

. Exercise 17-9 Using departmental overhead rates to 2 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. Process Activity Components Changeover Machining Setups 5464.000 Driver Number of batches Machine hours Number of setups Quantity 810 0,320 180 Finishing Welding Inspecting Rework Overhead Cost $ 464,000 313,000 234,000 $1,011,000 190.000 233,000 63,500 486,500 $ 132.000 32,500 63.000 232,500 Welding hours Number of inspections Rework orders .400 865 250 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 4.900 4.900 Additional production information concerning its two product lines follows. Model 145 1,800 Model 212 3.100 3,200 2,200 405 Units produced Welding hours Batehes Number of inspections Machine hours Setup Rework orders Purchase orders 3,050 5,270 130 Required: 1 of 1 Next

Answer 1

• Requirement 1

Components:
Overhead costs	$           1,011,000.00	121.51	per machine hour
Machine hours	8,320
Finishing:
Overhead costs	$              486,500.00	90.09	per weilding hour
Weilding hours	5,400
Support:
Overhead costs	$              232,500.00	506.54	per purchase order
Purchase orders	459
Model 145	Activity Driver	Departmental OH rate	Total Overhead cost
Components	3050	$              121.51	$          370,605.50
Finishing	2200	$                 90.09	$          198,198.00
Support	306	$              506.54	$          155,001.24
			$          723,804.74
		Units	1800
		Overhead cost per unit	$                  402.11
Model 212	Activity Driver	Departmental OH rate	Total Overhead cost
Components	5270	$              121.51	$          640,357.70
Finishing	3200	$                 90.09	$          288,288.00
Support	153	$              506.54	$            77,500.62
			$      1,006,146.32
		Units	3100
		Overhead cost per unit	$                  324.56

• [2]

Working		Model 145	Model 212
A	Material & Labor per unit	$              270.00	$                  180.00
B	Overhead cost per unit	$              402.11	$                  324.56
C = A + B	Total Cost per unit	$              672.11	$                  504.56

• [3]

Working		Model 145	Model 212
A	Price per unit	$              875.00	$                  250.00
B	Cost per unit	$              672.11	$                  504.56
C = A - B	Profit (Loss) per unit	$              202.89	$                (254.56)