Exercise 17-7 Using the plantwide overhead rate to assess prices LO P1 Way Cool

Question

Exercise 17-7 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of alr 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 assoclated with these two manufacturing processes and the production support process follow. (Loss amounts should be Indicated with a minus sign. Round your Intermedlate calculetlons and round "Cost per unlt and OH rate" answers to 2 declmal places.) Process Activity Components Changeover Overhead Cost Driver $454,588 381,6e8 226,5e8 $ 982,688 $ 182,388 222,808 62,8e8 466, 3e8 $ 136,588 31,85e 68,778 $ 228,328 Machining Setups Number of batches Machine hours Number of setups 718 7,680 48 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 5,788 830 238 Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 563 5,480 5,488 Support Additional production Information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 1,800 2,480 355 518 2,288 3,688 3,380 355 328 5,488 28 158 375 188

Explanation / Answer

1) Using plant wide overhead rate based on machine hours : Overhead cost 982600+466300+228320 1677220 $ 218.39 Per machine hr Machine hours 7680 2) Determination of total cost per unit for each product line : Overhead assigned ACTIVITY DRIVER Plant wide OH rate Total OH cost units produced OH cost per unit Mode 145 2280 218.39 497929.2 1800 276.63 Model 212 5400 218.39 1179306 3600 327.59 Total manfacturing cost Model 145 Model 212 Material and labour 190 145 Overhead 276.63 327.59 Total manfacturing cost 466.63 472.59 3) Determination of profit / loss : Model 145 Model 212 Market price 759 490 Manfacturing cost per unit -466.63 -472.59 Profit Per unit 292.37 17.41

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.