Exercise 04-11 Using ABC to assess prices LO P3 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 Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 830 8,650 80 Finishing Welding Inspecting Rework Overhead Cost $ 535, 350 404,820 146,000 $1,086,170 $ 309,680 312,000 31,500 $ 653,180 $ 172,050 30,600 82,800 $ 285,450 Welding hours Number of inspections Rework orders 4,900 780 150 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 555 6,000 6,000 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 2,000 800 415 470 3,350 40 70 370 Model 212 4,000 4,100 415 310 5,300 40 80 185 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 $200 for Model 145 and $117 for Model 212. 3. If the market price for Model 145 is $652.27 and the market price for Model 212 is $397.79, 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 145 Activity driver Overhead incurred assigned Expected Costs Expected Activity Activity Rate Model 212 Activity driver Overhead incurred assigned S Activity Components Changeover Machining Setups Finishing 535,350 404,820 146,000 830 Number of batches 8,650 Machine hours 80 Setups Welding S 309,680 312.000 4,900 Welding hours 780 Inspections 150 Rework orders 31,500 Inspecting Rework Support Purchasing Providing space and utilities S 172,050 113,400 555 Purchase orders 6.000 Units $ 0 S 0 Total overhead cost Total units produced Overhead cost per unit Required Required 2 > Required 1 Required 2 Required 3 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 $117 for Model 212. (Round your final answers to 2 decimal places.) Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit Required 1 Required 2 Required 3 If the market price for Model 145 is $652.27 and the market price for Model 212 is $397.79, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.) Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit