Question

Real 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. (Round OH rate, cost per unit and dollar amounts answers to 2 decimal places.)

Activity Overhead Cost Driver Quantity Process $459,000 300,800 227,000 $986,800 $182,000 225,000 60,300 $467,300 $138,000 31,000 60,250 $229,250 Components Changeover Number of batches Machine hours Number of setups 710 Machining Setups 7,590 60 Finishing Welding Welding hours Number of inspections Rework orders 4,900 845 200 Inspecting Rework Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 540 4,800 4,800 Support Additional production information concerning its two product lines follows Model 145 Model 212 3,200 3,500 355 330 5,300 30 90 180 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 1,600 1,400 355 515 2,290 30 110 360 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Plantwide OH rate Activity Driver UnitsOH Cost Producedper unit Total Overhead Cost Overhead Assigned Model 145 Model 212 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 $130 for Model 212. Model 145 Model 212 3. Assume if the market price for Model 145 is $738 and the market price for Model 212 is $530, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

Answer 1

1
Overhead costs	1683350	221.79	per machine hour
Machine hours	7590
Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Model 145	2290	221.79	507899	1600	317.44
Model 212	5300	221.79	1175487	3200	367.34
2
Total manufacturing cost per unit:	Model 145	Model 212
Materials and Labor per unit	250.00	130.00
Overhead	317.44	367.34
Total manufacturing cost	567.44	497.34
3
	Model 145	Model 212
Market price	738.00	530.00
Manufacturing cost per unit	567.44	497.34
Profit(loss) per unit	170.56	32.66
Note: Answers might vary +1 due to rounding off