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 $452,000 Number of 790 batches Machining 300,200 Machine hours 7,560 Setups 229,080 Number of setups Be $981,200 Finishing Welding $181,888 Welding hours 4,200 Inspecting 223,000 Number of 760 inspections Rework 61,300 Rework orders 190 $466,100 Support Purchasing $135,000 Purchase orders 570 Providing 30,850 Number of units 6,080 space Providing utilities 60,740 Number of units 6.ee $226,590 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 2,880 4,000 Welding hours 1.400 2.800 Batches 395 395 Number of 495 265 inspections Machine hours 2,260 5,300 Setups 40 Rework orders 90 Purchase orders 380 190 lee Required: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs O per machine hour Machine hours 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and 5180 for Model 212. Plantwide OH rate Units Produced OH Cost per unit Overhead Assigned Model 145 Model 212 Activity Driver 2.000 4,000 Total Overhead Cost 0 $ 0 Model 145 Model 212 0 3. the market price for Model 145 is $741 and the market price for Model 212 is $460, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

Answer 1

1)
Overhead Costs ( $ 981,200 + $ 466,100 + $ 226,590 )`	$ 1,673,890	$ 221.41	per machine hour
/   Machine Hours	/ 7,560
2)
Overhead Assigned	Activity Driver (A)	Plantwide OH rate (B)	Total Overhead cost C = ( A x B )	Units Produced (D)	OH cost per unit ( C /D )
Model 145	2,260	$ 221.41	$ 500,386.60	2,000	$ 250.19
Model 212	5,300	$ 221.41	$ 1,173,473	4,000	$ 293.37
	Model 145	Model 212
Direct material and labor	$ 250	$ 180
Overhead cost per unit	$ 250.19	$ 293.37
Total Manufacturing Cost per unit	$ 500.19	$ 473.37
3)
	Model 145	Model 212
Selling price per unit	$ 741	$ 460
Cost per unit	($ 500.19)	-473.37
Profit (Loss) per unit	$ 240.81	($ 13.37)