Question

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their 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		$	451,500		Number of batches	890
	Machining			302,000		Machine hours	7,650
	Setups			227,500		Number of setups	200
			$	981,000
Finishing	Welding		$	181,200		Welding hours	4,300
	Inspecting			221,000		Number of inspections	825
	Rework			60,100		Rework orders	140
			$	462,300
Support	Purchasing		$	136,000		Purchase orders	525
	Providing space			31,450		Number of units	6,600
	Providing utilities			60,550		Number of units	6,600
			$	228,000

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		2,200			4,400
Welding hours		1,600			2,700
Batches		445			445
Number of inspections		485			340
Machine hours		2,300			5,350
Setups		100			100
Rework orders		90			50
Purchase orders		350			175

using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line.

350 175 Purchase orders equired: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs 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 $180 for Model 145 and $140 for Model 212. Activity Plantwide OH Total Overhead Cost Produced Driver Units OH Cost pe unit Overhead Assigned Model 145 Model 212 rate Model 145 Model 212 3. If the market price for Model 145 is $750 and the market price for Model 212 is $460, determine the profit or ss per unit for each model. Model 145 Model 212 Market price 1 of 5 E Golf & Adventure Travel Expedition Scott Cell 904-377-6502 Grace Ce

Answer 1

Model 145 Model 212 Activity driver Activity driver Overhead Activity Expected Costs Expected Activity Activity Rate 250,000 83,700 112,500 250,000 195,300 112,500 400 S 400 $ 500.000 279,000 225,000 800 Number of batches S 625.00 per batch 4,200 $ 60 6,000 Machine hours 46.50 per machine hour ,875.00 per setup 1,800 20 Setups Finishing 3,000 Welding hours 700 Inspections 300 Rework orders 60.10 per welding hour 300.00 per inspection 250.00 per rework order 2,200 $ Inspecting Rework 180,300 210,000 75.000 48,080 120,000 40,000 300 140 $ 132.220 90,000 35,000 160 150 3,500 $ Purchasing 135,000 450 Purchase orders 5,000 Units 300.00 per purchase order 90,000 29,100 773,380 1,500 515.59 45,000 67.900 927.920 3.500 265.12 Providing space and utilities 97.000 19.40 per unit 1,500 Total overhead cost Total units produced Overhead cost per unit

Model 145 Model 212 Materials and Labor per unit Overhead per unit Total cost per unit 250.00 S 515.59 765.59 S 180.00 265.12 445.12

Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit 820.00 S 480.00 445.12 34.88 765.59 54.41 S