Way Cool produces two different models of air conditioners. The company produces

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 $180 for Model 212.
3. If the market price for Model 145 is $950 and the market price for Model 212 is $320, determine the profit or loss per unit for each model.

Process Activity Overhead Cost Driver Quantity Components Changeover $ 476,000 Number of batches 850 Machining 309,000 Machine hours 7,800 Setups 232,000 Number of setups 80 $ 1,017,000 Finishing Welding $ 192,000 Welding hours 5,500 Inspecting 220,000 Number of inspections 880 Rework 61,000 Rework orders 250 $ 473,000 Support Purchasing $ 139,000 Purchase orders 537 Providing space 31,500 Number of units 5,170 Providing utilities 70,000 Number of units 5,170 $ 240,500 Hop Save & Chapter 4 Homework 2 Way Cool produces two diflerent models of air conditioners. The company produces the mechanical systems in department. The mechanical systems are combined with drivers associated with these two manufacturing processes and the production support process the housing assembly i n its finishing department. The activities, costs, and 254 inLahing Weld Enapect ing Support Prchaaing aber of nite Additional production information cenceening its two product lines foilows

Explanation / Answer

1.

Working:

Component department cost per machine hour 130.38 Finishing department cost per welding hour 86.00 Support department cost per purchase order 447.86

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