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		$	457,500		Number of batches	850
	Machining			300,800		Machine hours	7,520
	Setups			227,000		Number of setups	120
			$	985,300
Finishing	Welding		$	180,400		Welding hours	4,600
	Inspecting			234,000		Number of inspections	815
	Rework			60,500		Rework orders	250
			$	474,900
Support	Purchasing		$	135,000		Purchase orders	495
	Providing space			31,100		Number of units	5,100
	Providing utilities			60,790		Number of units	5,100
			$	226,890

additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,700			3,400
Welding hours		1,600			3,000
Batches		425			425
Number of inspections		525			290
Machine hours		2,270			5,250
Setups		60			60
Rework orders		140			110
Purchase orders		330			165

1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $300 for Model 145 and $200 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 Model 145 Model 212 3. If the market price for Model 145 is $756 and the market price for Model 212 is $440, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

Answer 1

1
Overhead costs	1687090	224.35	per machine hour
Machine hours	7520
2
Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Model 145	2270	224.35	509275	1700	299.57
Model 212	5250	224.35	1177838	3400	346.42
Total manufacturing cost per unit:	Model 145	Model 212
Materials and Labor per unit	300.00	200.00
Overhead	299.57	346.42
Total manufacturing cost	599.57	546.42
3
	Model 145	Model 212
Market price	756.00	440.00
Manufacturing cost per unit	599.57	546.42
Profit(loss) per unit	156.43	-106.42