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		$	458,500		Number of batches	770
	Machining			300,800		Machine hours	7,560
	Setups			228,000		Number of setups	140
			$	987,300
Finishing	Welding		$	181,800		Welding hours	5,500
	Inspecting			229,000		Number of inspections	770
	Rework			61,800		Rework orders	200
			$	472,600
Support	Purchasing		$	137,500		Purchase orders	525
	Providing space			31,600		Number of units	4,800
	Providing utilities			60,220		Number of units	4,800
			$	229,320

   

Additional production information concerning its two product lines follows.

  

	Model 145			Model 212
Units produced		1,600			3,200
Welding hours		2,000			3,500
Batches		385			385
Number of inspections		460			310
Machine hours		2,260			5,300
Setups		70			70
Rework orders		70			130
Purchase orders		350			175

1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line.
		0
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $190 for Model 145 and $110 for Model 212.
Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Model 145			$0
Model 212			$0
		Model 145	Model 212
0
3. Assume if the market price for Model 145 is $737 and the market price for Model 212 is $500, determine the profit or loss per unit for each model.
		Model 145	Model 212
Market price

Answer 1

1
Overhead costs	1689220	223.44	per machine hour
Machine hours	7560
2
Overhead Assigned	Activity Driver	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Model 145	2260	223.44	504974	1600	315.61
Model 212	5300	223.44	1184232	3200	370.07
Total manufacturing cost per unit:	Model 145	Model 212
Materials and Labor per unit	190.00	110.00
Overhead	315.61	370.07
Total manufacturing cost	505.61	480.07
3
	Model 145	Model 212
Market price	737.00	500.00
Manufacturing cost per unit	505.61	480.07
Profit(loss) per unit	231.39	19.93