Way Cool produces two different models of air conditioners. The company produces
ID: 2405548 • Letter: W
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.
Additional production information concerning its two product lines follows.
Required:
1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $200 for Model 145 and $200 for Model 212.
3. If the market price for Model 145 is $1,025 and the market price for Model 212 is $320, determine the profit or loss per unit for each model.
Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. (Round your intermediate calculations and per unit cost answers to 2 decimal places.)
Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $200 for Model 145 and $200 for Model 212. (Round your intermediate calculations and cost per unit answers to 2 decimal places.)
If the market price for Model 145 is $1,025 and the market price for Model 212 is $320, determine the profit or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.)
Process Activity Overhead Cost Driver Quantity Components Changeover $ 470,000 Number of batches 730 Machining 313,000 Machine hours 8,520 Setups 225,000 Number of setups 140 $ 1,008,000 Finishing Welding $ 186,000 Welding hours 5,100 Inspecting 234,000 Number of inspections 830 Rework 62,500 Rework orders 230 $ 482,500 Support Purchasing $ 137,000 Purchase orders 531 Providing space 31,000 Number of units 4,720 Providing utilities 65,000 Number of units 4,720 $ 233,000Explanation / Answer
Model 145 model 212 Activity Expected Expected activity Activity rate Activity oh Activity oh costs driver assigned driver assigned Components Changeover 470,000 730 no batches 643.8356 no batches 365 235000 365 235000 Machining 313,000 8,520 MH's 36.73709 MH's 3,250 119395.5 5,270 193604.5 Setups 225,000 140 no setups 1607.143 no setups 70 112500 70 112500 Finishing Welding 186,000 5,100 welding hrs 36.47059 welding hrs 1,800 65647.06 3,300 120352.9 Inspecting 234,000 830 no inspections 281.9277 no inspections 490 138144.6 340 95855.42 Rework 62,500 230 Re orders 271.7391 Re orders 140 38043.48 90 24456.52 Support Purchasing 137,000 531 pur orders 258.0038 pur orders 354 91333.33 177 45666.67 providing space&yutilit 96,000 4,720 no units 20.33898 no units 1,700 34576.27 3,020 61423.73 1,723,500 total oh 834640.3 888859.7 units produced 1,700 3,020 oh cost per unit 490.96 294.32 model 145 model 212 2) Materials and labor per unit 200.00 200.00 overhead cost per unit 490.96 294.32 total cost per unit 690.96 494.32 3) model 145 model 212 price per unit 1025 320.00 cost per unit 690.96 494.32 profit(loss)per unit 334.04 -174.32
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