Exercise 04-11 Using ABC to assess prices LO P3 Way Cool produces two different models of alr 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 750 8,020 120 Overhead Cost $ 498,750 365,712 216,00 $ 990, 462 $ 250, 560 326, 675 45,850 $ 622,285 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 4,800 895 17e Support Purchasing Providing space Providing utilities $ 184,470 31,100 30,280 $ 245,850 Purchase orders Number of units Number of units 473 3, 30e 3,300 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 1,100 1,400 375 495 2,750 60 120 315 Model 212 2,200 3,480 375 400 5,270 50 158 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 $210 for Model 145 and $121 for Model 212. 3. If the market price for Model 145 is $998.54 and the market price for Model 212 is $572.27, 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 Model 212 Activity driver Overhead incurred assigned Activity Expected Costs Expected Activity Activity Rate Components S 408.750 365.712 216.000 750 Number of batches 8,020 Machine hours 120 Setups Changeover Machining Setups Finishing Welding Inspecting Rework S $ 250.580 4,800 Welding hours 895 Inspections 326.675 45.050 170 Rework orders Support Purchasing Providing space and utilities $ 184.470 473 Purchase orders 61.380 3,300 Units Total overhead cost Total units produced Overhead cost per unit 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 $210 for Model 145 and $121 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 $998.54 and the market price for Model 212 is $572.27, 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
