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. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.)

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	453,000		Number of batches	870
	Machining			301,800		Machine hours	7,630
	Setups			228,000		Number of setups	180
			$	982,800
Finishing	Welding		$	180,300		Welding hours	4,600
	Inspecting			230,000		Number of inspections	785
	Rework			60,950		Rework orders	180
			$	471,250
Support	Purchasing		$	135,000		Purchase orders	555
	Providing space			30,700		Number of units	5,700
	Providing utilities			60,610		Number of units	5,700
			$	226,310

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,900			3,800
Welding hours		1,200			3,400
Batches		435			435
Number of inspections		510			275
Machine hours		2,330			5,300
Setups		90			90
Rework orders		120			60
Purchase orders		370			185

  Required:
1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $290 for Model 145 and $160 for Model 212.
3. If the market price for Model 145 is $1,925 and the market price for Model 212 is $260, determine the profit or loss per unit for each model.

Answer 1

1	Components Departments:
	Overhead Costs	982800	$                   128.81	Per Machine Hours
	Machine Hours	7630
	Finishing Departments:
	Overhead Costs	471250	$                   102.45	Per Welding Hours
	Welding Hours	4600
	Support Departments:
	Overhead Costs	226310	$                   407.77	Per Purchase Order
	No.of Purchase Order	555
	Model 145	Activity Driver	Departmental OH	Total OH Cost
	Components	2330	$                   128.81	$               300,127.30
	Finishing	1200	$                   102.45	$               122,940.00
	Support	370	$                   407.77	$               150,874.90
				$               573,942.20
	Units Produced			1900
	Per Unit			$                       302.07
	Model 212	Activity Driver	Departmental OH	Total OH Cost
	Components	5300	$                   128.81	$               682,693.00
	Finishing	3400	$                   102.45	$               348,330.00
	Support	185	$                   407.77	$                 75,437.45
				$           1,106,460.45
	Units Produced			3800
	Per Unit			$                       291.17
2		Model 145	Model 212
	Materials and Labor per unit	$             290.00	$                   160.00
	Overhead Per unit	$             302.07	$                   291.17
	Total Cost per Unit	$             592.07	$                   451.17
3		Model 145	Model 212
	Materials and Labor per unit	$         1,925.00	$                   260.00
	Overhead Per unit	$             592.07	$                   451.17
	Profit Per Unit	$         1,332.93	-$                   191.17

-----------------------------------------------------------------------------------

**

If you have any queries/doubts,Please, Immediately drop your messages in the comment box !!!! I will help you...
Thanks!!!