Question
CAN SOMEONE PLEASE EXPLAIN WHAT I AM DOING WRONG!!!!!!!!!!!!!!!!!!!!!!!!!! Way Cool produces two different models of air conditioners. The company produces the mechanical systems in
CAN SOMEONE PLEASE EXPLAIN WHAT I AM DOING WRONG!!!!!!!!!!!!!!!!!!!!!!!!!!
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 | $ | 586,950 | Number of batches | 910 | |||
Machining | 377,580 | Machine hours | 8,120 | |||||
Setups | 259,000 | Number of setups | 140 | |||||
$ | 1,223,530 | |||||||
Finishing | Welding | $ | 259,000 | Welding hours | 5,000 | |||
Inspecting | 337,625 | Number of inspections | 925 | |||||
Rework | 27,600 | Rework orders | 120 | |||||
$ | 624,225 | |||||||
Support | Purchasing | $ | 197,050 | Purchase orders | 563 | |||
Providing space | 31,000 | Number of units | 7,200 | |||||
Providing utilities | 104,360 | Number of units | 7,200 | |||||
$ | 332,410 | |||||||
Additional production information concerning its two product lines follows.
Model 145 | Model 212 | |||||
Units produced | 2,400 | 4,800 | ||||
Welding hours | 1,400 | 3,600 | ||||
Batches | 455 | 455 | ||||
Number of inspections | 515 | 410 | ||||
Machine hours | 2,850 | 5,270 | ||||
Setups | 70 | 70 | ||||
Rework orders | 70 | 50 | ||||
Purchase orders | 375 | 188 | ||||
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 $121 for Model 212. 3. If the market price for Model 145 is $670.79 and the market price for Model 212 is $365.60, determine the profit or loss per unit for each model.
Required 1 Required 2 Required 3 Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.) Model 212 Model 145 Activity driver Activity driver incurred Overhead assigned Overhead assigned Expected Costs Activity Expected Activity Activity Rate incurred Components Number of batches Machine hours 293,475 189.291,375 645.00 per batch 586,950 293,475 Changeover 910 189,291,375 per machine hour 6,162,413 245,055 11,395,058 Machining 377,580 8,120 46.50 132,525 129,500 239,575,000 129,500 239,575,000 1,850.00 per setup $ Setups 259,000 140 Setups Finishing Welding hours Inspections per welding hour per inspection per rework order Welding 51.80 72,520 259,000 5,000 3,756,536 272,986 14,140,675 365.00 187,975 68,610,875 54,622,250 Inspecting 337,625 925 149,650 Rework orders 3,703,000 Rework 27,600 120 230.00 16,100 11,500 2,645,000 Support Purchase orders 197,050 per purchase order Purchasing 131,250 65,800 563 350.00 45,937,500 23,030,000 18.80 per unit 135,360 7,200 45,120 848,256 90,240 1,696,512 Providing space and utilities Units Total overhead cost 536,395,870 557,884,955 Total units produced 4,800 2,400 $ 232,452.07 $111,433.30 Overhead cost per unitStep by Step Solution
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