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 Components Changeover Machining Setups Quantity 850 7,670 200 Finishing Welding Inspecting Rework Overhead Coat Driver $ 452,500 Number of batches 301,000 Machine hours 226,000 Number of setups $ 979,500 $ 181,800 Welding hours 234,000 Number of inspections 60, 109 Revork orders $ 475,900 $ 134,500 Purchase orders 30, 400 Number of units 60,810 Number of units $ 225, 710 5,800 835 230 Support Purchasing Providing space Providing utilities 533 5,100 5,100 Additional production information concerning its two product lines follows. Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 1,700 2,200 425 495 2,320 100 160 355 3,400 3,600 425 340 5, 350 100 70 178

Answer 1

1) Plant-wide overhead rate Total overhead costs #machine hours Overhead rate per machine hour $1,681,110 ($979500 + $475900 + $225710] 7,670 $219.18 ($1681110 / 7670 machine hours) Overhead Assigned Model 145 Model 212 (a) Activity Driver 2,320 5,350 (b) Plant-wide OH Rate $219.18 $219.18 (u)=(a) x (b) Total OH Cost $508,498 $1,172,613 (v) Units Produced 1,500 3,600 (u)/(v) OH Cost per Unit $339.00 $325.73 [$508498 / 1500] ($1172613/ 3600] 2) Unit Direct material & labor cost Overhead cost per unit Total cost per unit Model 145 $200.00 $339.00 $539.00 Model 212 $150.00 [Given] $325.73 [Ref: Part-1] $475.73 [$200.00 + $339.00 = $539.00; $150.00 + $325.73 = $475.73] 3) Model 145 Market price per unit Total cost per unit Profit or (loss) per unit $751.00 $539.00 $212.00 Model 212 $480.00 [Given] $475.73 [Ref: Part-2] $4.27 [$751.00 - $539 = $212.00; $480.00 - $475.73 = $4.27]