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 Activity Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 910 7,730 200 Finishing Welding Inspecting Rework Overhead Cost $ 559,650 364,856 371,000 $1,295,506 $ 334,360 364,000 44,100 $ 742,460 $ 170,560 31,200 48,180 $ 249,940 Welding hours Number of inspections Rework orders 5,200 910 180 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 533 4,200 4,200 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Number of inspections Machine hours Setups Model 145 1,400 1,400 455 520 2,450 100 Model 212 2,800 3,800 455 390 5,280 100

Answer 1

Answer 1. Activity Expected Costs Expected Activity Activity Rate Model 145 Activity Overhead driver assigned incurred Model 212 Activity Overhead driver assigned incurred 559650 364856 371000 910 number of batches 7730 machine hours 200 setups 615.00 per batch 47.20 per machine hour 1855.00 per setup 455 2450 100 279825 115640 185500 455 5280 100 279825 249216 185500 Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 334360 364000 44100 5200 welding hours 910 inspections 180 rework ordeers 64.30 per welding hour 400.00 per inspection 245.00 per rework order 1400 520 100 90020 208000 24500 3800 390 80 244340 156000 19600 170560 793801 533 purchase orders 4200 units 355 1400 178 2800 320.00 per purchase order 18.90 per unit Total overhead costs Total units produced Overhead cost per unit 113600 26460 1043545 1400 745.39 569601 52920 1244361 2800 444.41 Answer 2. Materials and labor per unit Overhead cost per unit Total cost per unit Model 145 220.00 745.39 965.39 Model 212 112.00 444.41 556.41 Answer 3. Price per unit Cost per unit Profit (loss) per unit Model 145 | Model 212 965.91 556.83 965.39 556.41 0.52 0.42