3 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 $ 462,000 Number of batches 810 Machining 301,000 Machine hours 8,190 Setups 229,000 Number of setups 80 $ 992,000 Finishing Welding $ 188,000 Welding hours 4,900 Inspecting 224,000 Number of inspections 835 Rework 64,000 Rework orders 140 $ 476,000 Support Purchasing $ 149,000 Purchase orders 543 Providing space 35,500 Number of units 4,960 Providing utilities 69,000 Number of units 4,960 $ 253,500 Additional production information concerning its two product lines follows Model 145 Model 212 Units produced 1,900 3,060 Welding hours 800 4,100 Batches 405 405 Number of inspections 475 360 Machine hours 2,850 5,340 Setups 40 40 Rework orders 90 50 Purchase orders 362 181 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 $240 for Model 145 and $150 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 Components department Finishing department Support department Model 145 Activity Driver Departmental OH Rate Total Overhead Cost Components Finishing Support Model 212 Activity Driver Departmental OH Rate Total Overhead Cost Components Finishing Support

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3. Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined

3. 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		$	462,000	Number of batches	810
	Machining			301,000	Machine hours	8,190
	Setups			229,000	Number of setups	80
			$	992,000
Finishing	Welding		$	188,000	Welding hours	4,900
	Inspecting			224,000	Number of inspections	835
	Rework			64,000	Rework orders	140
			$	476,000
Support	Purchasing		$	149,000	Purchase orders	543
	Providing space			35,500	Number of units	4,960
	Providing utilities			69,000	Number of units	4,960
			$	253,500

Additional production information concerning its two product lines follows.

	Model 145		Model 212
Units produced		1,900		3,060
Welding hours		800		4,100
Batches		405		405
Number of inspections		475		360
Machine hours		2,850		5,340
Setups		40		40
Rework orders		90		50
Purchase orders		362		181

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 $240 for Model 145 and $150 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.


Components department


Finishing department


Support department



Model 145	Activity Driver	Departmental OH Rate	Total Overhead Cost
Components
Finishing
Support




Model 212	Activity Driver	Departmental OH Rate	Total Overhead Cost
Components
Finishing
Support