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	Overhead Cost				Driver	Quantity
Components	Changeover		$	457,000		Number of batches	790
	Machining			301,800		Machine hours	7,580
	Setups			226,500		Number of setups	60
			$	985,300
Finishing	Welding		$	181,300		Welding hours	5,000
	Inspecting			223,000		Number of inspections	805
	Rework			61,350		Rework orders	170
			$	465,650
Support	Purchasing		$	134,000		Purchase orders	510
	Providing space			32,250		Number of units	5,400
	Providing utilities			60,330		Number of units	5,400
			$	226,580

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,800			3,600
Welding hours		1,600			3,400
Batches		395			395
Number of inspections		470			335
Machine hours		2,330			5,250
Setups		30			30
Rework orders		120			50
Purchase orders		340			170

Required:

Required: 1. Using a plantwide overhead rate based on machine hours, 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 $220 for Model 145 and $160 for Model 212. Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Overhead Assigned Model 145 Model 212 NE Het Model 145 Model 212 3. If the market price for Model 145 is $757 and the market price for Model 212 is $510, determine the profit or loss per unit for each model. Model 145 Model 212 Market price