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Exercise 04-8 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of air conditioners. The company produces the
Exercise 04-8 Using the plantwide overhead rate to assess prices LO P1 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. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Components Changeover Machining Setups Quantity 870 7,590 100 Finishing Welding Inspecting Rework Overhead Cost Driver $ 454,000 Number of batches 301,600 Machine hours 226,500 Number of setups $ 982, 100 $ 182,400 Welding hours 220,000 Number of inspections 60,200 Rework orders $ 462,600 $ 134,500 Purchase orders 31,500 Number of units 60,720 Number of units $ 226,720 5,400 740 160 Support Purchasing Providing space Providing utilities 518 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 1,800 435 470 2,290 50 70 345 Model 212 3,400 3,600 435 270 5,300 50 90 173 Required: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs $ 1.671.420 $ 220.21 per machine hour Machine hours 7,590 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $220 for Model 145 and $130 for Model 212. Activity Driver Plantwide OH rate OH Cost per unit Overhead Assigned Model 145 Model 212 Total Overhead Cost $ 0 $ 0 Units Produced 1,700 3,400 $ Model 145 Model 212 0 3. If the market price for Model 145 is $743 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. Model 145 Model 212 Market price
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