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.

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	472,000		Number of batches	710
	Machining			308,000		Machine hours	8,650
	Setups			226,000		Number of setups	200
			$	1,006,000
Finishing	Welding		$	190,000		Welding hours	5,700
	Inspecting			233,000		Number of inspections	780
	Rework			62,500		Rework orders	180
			$	485,500
Support	Purchasing		$	139,000		Purchase orders	549
	Providing space			33,500		Number of units	4,730
	Providing utilities			68,000		Number of units	4,730
			$	240,500

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,700			3,030
Welding hours		2,200			3,500
Batches		355			355
Number of inspections		460			320
Machine hours		3,350			5,300
Setups		100			100
Rework orders		80			100
Purchase orders		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 $230 for Model 145 and $150 for Model 212. 3. If the market price for Model 145 is $1,475 and the market price for Model 212 is $320, 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 amber of purchase orders. (Round your intermediate calculations and per unit cost answers to 2 decimal places.) Show less PET Components department NA AS Finishing department TA Support department erences Model 145 Activity Driver Departmental OH Rate Total Overhead Cost s Components Finishing Support Model 212 Activity Driver Departmental OH Rate Total Total Overhead Cost Components Finishing Support Pull 2501 1 $150 for Model 212) f the market/pride for Model 145 15/51/47 del. Hon Model 212 is $320. determine the profit or loss per Comblete this question by emitevind your ansv e tabs below. ANITARIUM ed Required 21 Determine the total cost per unit for each 145 and $150 for Model 2121 RO direct labor and direct materials costs per unit are $230 for Model latjonsland cost per unit answers to 2 decimal places.) Www Model 14513 Model 2 N TTINNITIVUYVE TIMUM Waterals and labor per Novembead cost per unit TUTTON Wotal cospel Required 1 Required 3 > Prev 1 of 1 o te @ search 9 Complete this question/bylenter ENOUria Reduire Required 2A TATTETETT If the market price for Model forleadh modelli Libsslamou to decimal places nd the market price for Model 212 is $320, determine the profit or loss per unit ed with almirus Isiant Round your intermediate calculations and final answers Model 145 Model 2121 tidele ill be lunii w th Profit (disser Required 2 1 of 1 o e - @ 9 earch