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		$	453,000		Number of batches	770
	Machining			300,600		Machine hours	7,630
	Setups			229,000		Number of setups	40
			$	982,600
Finishing	Welding		$	181,200		Welding hours	3,500
	Inspecting			232,000		Number of inspections	795
	Rework			60,350		Rework orders	220
			$	473,550
Support	Purchasing		$	135,500		Purchase orders	525
	Providing space			31,700		Number of units	5,700
	Providing utilities			60,070		Number of units	5,700
			$	227,270
Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,900 3,800 Welding hours 1,000 2,500 Batches 385 385 Number of inspections 470 325 Machine hours 2,330 5,300 Setups 20 20 Rework orders 100 120 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 $250 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. If the market price for Model 145 is $747 and the market price for Model 212 is $510, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

Answer 1

	Way Cool Company
	(A)	(B)	(A)/(B)
Process	Overhead Cost	Machine Hours	Plant wide overhead rate based on machine hours
Component	$         9,82,600.00
Finishing	$         4,73,550.00
Support	$         2,27,270.00
	$       16,83,420.00	7630	$                                                220.63
Total cost per unit of each of product line
	Model 145	Model 212
Material & Labor cost per unit	$                   250.00	$               110.00
Overhead((2330*220.63)/1900) for Model 145 and( (5300*220.63)/3800) for Model 212	$                   270.56	$               307.72
Total cost per unit	$                   520.56	$               417.72
Profit/Loss of each Model
	Model 145	Model 212
Market Price Per unit	$                   747.00	$               510.00
Cost Per units	$                   520.56	$               417.72
Profit/Loss	$                   226.44	$                  92.28