Exercise 17-11 Using ABC to assess prices LO P3 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 Components Changeover Machining Setups $ 430,550 378,975 224,400 $1,033,925 Number of batches Machine hours Number of setups Quantity 790 8,150 120 Finishing Welding $ 349,800 Welding hours 5,300 Inspecting 305,900 Number of inspections 805 Rework 43,200 Rework orders 160 Support Purchasing $ Providing space $ 698,900 222,300 30,300 Purchase orders 570 Number of units 5,700 Providing utilities 79,710 Number of unita 5,700 $ 332,310 Additional production information concerning its two product lines follows. Units produced Model 145 1,900 Model 212 3,800 Welding hours 1,800 3,500 Batches 395 395 Number of inspections 485 320 Machine hours 2,850 5,300 Setups 60 60 Rework orders 90 70 Purchase orders 380 190 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 $190 for Model 145 and $114 for Model 212. 3. If the market price for Model 145 is $702.41 and the market price for Model 212 is $401.94, determine the profit or loss per unit for each model. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Activity Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.) Model 145 Model 212 Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Components Changeover $ 430,550 790 Number of batches $ 545.00 per batch Machining 378,975 8,150 Machine hours $ 46.50 per machine hour Setups 224,400 120 Setups $ 1,870.00 per setup Overhead assigned 395 2,850 60 395 $ 5,300 215,275 246,450 112,200 Finishing Welding $ Inspecting Rework 349,800 305,900 43,200 5,300 Welding hours $ 66.00 per welding hour 1,800 118,800 3,500 231,000 805 Inspections $ 380.00 per inspection 485 184,300 320 121,600 160 Rework orders S 270.00 per rework order 90 24,300 70 18,900 Support Purchasing $ 222,300 570 Purchase orders $ 390.00 per purchase order 380 Providing space and utilities 110,010 5,700 Units $ 19.30 per unit 1,900 Total overhead cost $ Total units produced 148,200 36,670 624,470 1,900 190 74,100 3,800 73,340 $ 980,665 3,800 Overhead cost per unit $ 328.67 $ 258.07 < Required 1 Required 2 > Exercise 17-11 Using ABC to assess prices LO P3 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 Components Changeover Machining Setups $ 430,550 378,975 224,400 $1,033,925 Number of batches Machine hours Number of setups Quantity 790 8,150 120 Finishing Welding $ 349,800 Welding hours 5,300 Inspecting 305,900 Number of inspections 805 Rework 43,200 Rework orders 160 Support Purchasing $ Providing space $ 698,900 222,300 30,300 Purchase orders 570 Number of units 5,700 Providing utilities 79,710 Number of unita 5,700 $ 332,310 Additional production information concerning its two product lines follows. Units produced Model 145 1,900 Model 212 3,800 Welding hours 1,800 3,500 Batches 395 395 Number of inspections 485 320 Machine hours 2,850 5,300 Setups 60 60 Rework orders 90 70 Purchase orders 380 190 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 $190 for Model 145 and $114 for Model 212. 3. If the market price for Model 145 is $702.41 and the market price for Model 212 is $401.94, determine the profit or loss per unit for each model. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Activity Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.) Model 145 Model 212 Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Components Changeover $ 430,550 790 Number of batches $ 545.00 per batch Machining 378,975 8,150 Machine hours $ 46.50 per machine hour Setups 224,400 120 Setups $ 1,870.00 per setup Overhead assigned 395 2,850 60 395 $ 5,300 215,275 246,450 112,200 Finishing Welding $ Inspecting Rework 349,800 305,900 43,200 5,300 Welding hours $ 66.00 per welding hour 1,800 118,800 3,500 231,000 805 Inspections $ 380.00 per inspection 485 184,300 320 121,600 160 Rework orders S 270.00 per rework order 90 24,300 70 18,900 Support Purchasing $ 222,300 570 Purchase orders $ 390.00 per purchase order 380 Providing space and utilities 110,010 5,700 Units $ 19.30 per unit 1,900 Total overhead cost $ Total units produced 148,200 36,670 624,470 1,900 190 74,100 3,800 73,340 $ 980,665 3,800 Overhead cost per unit $ 328.67 $ 258.07 < Required 1 Required 2 >