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		$	457,000		Number of batches	810
	Machining			300,600		Machine hours	7,590
	Setups			229,000		Number of setups	200
			$	986,600
Finishing	Welding		$	181,800		Welding hours	5,900
	Inspecting			225,000		Number of inspections	730
	Rework			61,600		Rework orders	240
			$	468,400
Support	Purchasing		$	135,500		Purchase orders	563
	Providing space			32,250		Number of units	5,700
	Providing utilities			60,700		Number of units	5,700
			$	228,450

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,900			3,800
Welding hours		2,400			3,500
Batches		405			405
Number of inspections		470			260
Machine hours		2,290			5,300
Setups		100			100
Rework orders		160			80
Purchase orders		375			188

  
Required:

Using a plant wide overhead rate based on machine hours, compute the overhead cost per unit for each product line.

Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $310 for Model 145 and $140 for Model 212.

If the market price for Model 145 is $755 and the market price for Model 212 is $470, determine the profit or loss per unit for each model.

Answer 1