Exercise 04-9 Using departmental overhead rates to assess prices LO P2 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. Activity Changeover Machining Setups Overhead Cost Driver Quantity Process 476,000 302,000 Number of batches Components 790 Machine hours Number of setups 8,630 229,000 100 $1,007,000 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 184,000 233,000 65,000 5,200 850 270 $ 482,000 Purchasing Providing space Providing utilities Purchase orders Support 149,000 36,500 66,000 549 Number of units 4,460 Number of units 4,460 251,500 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches Number of inspections 3,060 3,800 395 1,400 1,400 395 470 380 3,350 Machine hours 5,280 Setups Rework orders Purchase orders 50 50 150 120 366 183 Required 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $310 for Model 145 and $180 for Model 212 3. If the market price for Model 145 is $2,000 and the market price for Model 212 is $270, determine the profit or loss per unit for each model. Required 1 Required 2 Required 3 Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. (Round your intermediate calculations and per unit cost answers to 2 decimal places.) Show less Components department Finishing department Support department Activity Driver Departmental OH Rate Model 145 Total Overhead Cost Components Finishing Support Activity Driver Departmental OH Rate Total Overhead Cost Model 212 Components Finishing Support Required 2 Required Complete this question by entering your answers in the tabs below. 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 $310 for Model 145 and $180 for Model 212. (Round your intermediate calculations and cost per unit 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 3 Required 1 Required 2 Required 3 If the market price for Model 145 is $2,000 and the market price for Model 212 is $270, determine the profit or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) Model 212 Model 145 Market price per unit Cost per unit Profit (loss) per unit Required 2 Required 3
