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		$	459,500		Number of batches	850
	Machining			301,200		Machine hours	7,520
	Setups			227,000		Number of setups	100
			$	987,700
Finishing	Welding		$	180,900		Welding hours	4,500
	Inspecting			222,000		Number of inspections	835
	Rework			61,000		Rework orders	120
			$	463,900
Support	Purchasing		$	137,000		Purchase orders	488
	Providing space			30,100		Number of units	5,700
	Providing utilities			60,060		Number of units	5,700
			$	227,160

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,900			3,800
Welding hours		1,000			3,500
Batches		425			425
Number of inspections		485			350
Machine hours		2,320			5,200
Setups		50			50
Rework orders		80			40
Purchase orders		325			163

Required.

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 $210 for Model 145 and $120 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. If the market price for Model 145 is $739 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		?	?
		?	?

Note: Please solve the problem completely.

Thank you,

Answer 1

1)
	overhead costs		1678760	223.24	per machine hour
	Machine hours		7,520
2)	Overhead assigned		Activity	plantwide	total oh	units	OH cost
			driver	OH rate	cost	produced	per unit
	Model 145		2,320	223.24	517915	1,900	272.59
	model 212		5,200	223.24	1160845	3,800	305.49
	total manufacturing cost			Model 145	Model 212
	per unit
	Materials and labor			210	120
	overhead			272.59	305.49
	total manufacturing cost			482.59	425.49
3)				Model 145	Model 212
	Market price			739	440
	manufacturing cost per unit			482.59	425.49
	profit (loss)per unit			256.41	14.51