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. Driver Process Activity Components Changeover Machining Setups Number of batches Quantity 750 7,640 180 Machine hours Number of setups Overhead Cost $ 431,250 348, 384 324,900 $1,104,534 $ 273,050 332,000 53, 100 $ 658,150 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 4,300 830 180 Support Purchasing Providing space Providing utilities $ 175,500 30,400 65,480 $ 271,388 Purchase orders Number of units Number of units 540 5,100 5,100 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 1,700 1,400 375 510 2,350 90 70 360 Model 212 3,400 2,900 375 320 5,290 90 110 180 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 $190 for Model 145 and $119 for Model 212. 3. If the market price for Model 145 is $748.19 and the market price for Model 212 is $438.83, determine the profit or loss per unit for each model Activity Model 145 Activity driver Overhead incurred assigned Expected Costs Expected Activity Activity Rate Activity de incurre $ 431,250 Components Changeover Machining Setups Finishing Welding Inspecting 348,384 324.900 750 Number of batches 7.640 Machine hours 180 Setups $ 273,050 332,000 53,100 4,300 Welding hours 830 Inspections 180 Rework orders Rework Support Purchasing $ 175,500 540 Purchase orders Providing space and utilities 95,880 5,100 Units Total overhead cost $ 0 M Total units produced Overhead cost per unit Model 145 Model 212 Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned $ 0 $ Total overhead cost Total 4gits 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