4.

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		$	491,250		Number of batches	750
	Machining			385,278		Machine hours	8,180
	Setups			72,200		Number of setups	40
			$	948,728
Finishing	Welding		$	306,800		Welding hours	5,200
	Inspecting			258,850		Number of inspections	835
	Rework			44,000		Rework orders	160
			$	609,650
Support	Purchasing		$	153,430		Purchase orders	458
	Providing space			30,200		Number of units	3,900
	Providing utilities			41,560		Number of units	3,900
			$	225,190

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,300			2,600
Welding hours		1,000			4,200
Batches		375			375
Number of inspections		475			360
Machine hours		2,850			5,330
Setups		20			20
Rework orders		80			80
Purchase orders		305			153

Required: 1. Using ABC, compute the overhead cost per unit for each product line. 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 $122 for Model 212. 3. If the market price for Model 145 is $843.13 and the market price for Model 212 is $512.15, determine the profit or loss per unit for

					Model 145		Model 212
Activity	Expected Costs	Expected Activity		Activity Rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Components
Changeover	$491,250	750	Number of batches
Machining	385,278	8,180	Machine hours
Setups	72,200	40	Setups
Finishing
Welding	$306,800	5,200	Welding hours
Inspecting	258,850	835	Inspections
Rework	44,000	160	Rework orders
Support
Purchasing	$153,430	458	Purchase orders
Providing space and utilities	71,760	3,900	Units
					Total overhead cost		$0		$0
					Total units produced
					Overhead cost per unit

	Model 145	Model 212
Materials and Labor per unit
Overhead cost per unit
Total cost per unit

	Model 145	Model 212
Price per unit
Cost per unit
Profit (loss) per unit