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.

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	596,050		Number of batches	910
	Machining			376,184		Machine hours	7,970
	Setups			72,000		Number of setups	40
			$	1,044,234
Finishing	Welding		$	322,380		Welding hours	5,400
	Inspecting			256,725		Number of inspections	815
	Rework			71,400		Rework orders	280
			$	650,505
Support	Purchasing		$	181,125		Purchase orders	525
	Providing space			30,900		Number of units	4,200
	Providing utilities			46,380		Number of units	4,200
			$	258,405

   
Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,400			2,800
Welding hours		1,400			4,000
Batches		455			455
Number of inspections		495			320
Machine hours		2,650			5,320
Setups		20			20
Rework orders		150			130
Purchase orders		350			175

  
Required:
1. Using ABC, 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 $190 for Model 145 and $116 for Model 212.
3. If the market price for Model 145 is $821.61 and the market price for Model 212 is $498.56, determine the profit or loss per unit for each model.

Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.)

Required 1:

Model 145 Model 212 Activity Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Components Changeover $596,050 910 Number of batches $655.00 per batch Machining 376,184 7,970 Machine hours $47.20 per machine hour Setups 72,000 40 Setups $1,800.00 per setup Finishing Welding $322,380 5,400 Welding hours $59.70 per welding hour Inspecting 256,725 815 Inspections $315.00 per inspection Rework 71,400 280 Rework orders $255.00 per rework order Support Purchasing $181,125 525 Purchase orders $345.00 per purchase order Providing space and utilities 77,280 4,200 Units $18.40 per unit Total overhead cost $0 $0 Total units produced Overhead cost per unit

Required 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 $116 for Model 212. (Round your final answers to 2 decimal places.)

	Model 145 Model 212 Materials and Labor per unit $190.00 $116.00 Overhead cost per unit Total cost per unit

Required 3:

If the market price for Model 145 is $821.61 and the market price for Model 212 is $498.56, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.)

	Model 145 Model 212 Price per unit $821.61 $498.56 Cost per unit Profit (loss) per unit

Answer 1