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 Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 710 8,080 200 Finishing Welding Inspecting Rework Overhead Cost $ 386,950 379,760 368,000 $1,134,710 $ 346,800 236, 375 63,800 $ 646,975 $ 160,875 30,700 122,390 $ 313,965 Welding hours Number of inspections Rework orders 5,100 775 220 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 495 8,100 8,100 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 2,700 1,800 355 455 2,750 100 140 330 Model 212 5,400 3,300 355 320 5,330 100 80 165 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 $220 for Model 145 and $119 for Model 212. 3. If the market price for Model 145 is $578.59 and the market price for Model 212 is $328.43, 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 Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.) Model 145 Activity driver Overhead incurred assigned Model 212 Activity driver Overhead incurred assigned Activity Expected Costs Expected Activity Activity Rate S 386,950 379,760 368,000 710 Number of batches 8,080 Machine hours 200 Setups Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities S 346,800 236,375 63,800 5,100 Welding hours 775 Inspections 220 Rework orders S 160.875 153,090 495 Purchase orders 8,100 Units S 0 s 0 Total overhead cost Total units produced Overhead cost per unit 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 $220 for Model 145 and $119 for Model 212. 3. If the market price for Model 145 is $578.59 and the market price for Model 212 is $328.43, 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 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 $119 for Model 212. (Round your final answers to 2 decimal places.) Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If the market price for Model 145 is $578.59 and the market price for Model 212 is $328.43, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.). Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit
