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 Process Components Activity Changeover Machining Setups Quantity 830 7.799 120 Finishing Welding Inspecting Rework Overhead Cost Driver 5454,800 Number of batches 307,000 Machine hours 229,000 Number of setups $ 990,000 $ 184,090 Welding hours 230, obe Number of inspections 64,000 Rework orders $ 478,000 $ 145,000 Purchase orders 33,500 Number of units 63,000 Number of units 5241,500 4,860 855 200 Support Purchasing Providing space Providing utilities 531 5.000 5.000 Additional production information concerning its two product lines follows Model 145 1.900 1.800 Model 212 2.100 3.000 Units produced elding hours Batches Sumber of inspections Wachine hours 360 2.450 REV 1 of 1 i! Nakt

Answer 1

Solution 1:

Computation of Departmental Overhead rates and overhead cost per unit
Department	Overhead cost	Allocation Base	Qty of allocation base	Overhead rate	Model 145		Model 212
					Activity Driver	Allocated Overhead cost	Activity Driver	Allocated Overhead cost
Components	$990,000.00	Machine hours	7790	$127.09	2450	$311,361	5340	$678,639
Finishing	$478,000.00	Welding hours	4800	$99.58	1800	$179,250	3000	$298,750
Support	$241,500.00	Purchase orders	531	$454.80	354	$161,000	177	$80,500
Total						$651,611		$1,057,889
Nos of units						1900		3100
Overhead cost per unit						$342.95		$341.25

Solution 2:

Computation of Per unit Cost
Particulars	Model 145	Model 212
Direct material and labor	$210.00	$119.00
Overhead cost per unit	$342.95	$341.25
Cost per unit	$552.95	$460.25

Solution 3:

Computation of Profit (Loss) per unit
Particulars	Model 145	Model 212
Selling price per unit	$1,625.00	$250.00
Cost per unit	$552.95	$460.25
Profit (Loss) per unit	$1,072.05	-$210.25