Exercise 17-8

Exercise 17-8 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 Components Changeover Machining Setups Quantity 098 7,722 162 Finishing Welding Inspecting Rework Dverhead Cost Driver $ 454,569 Number of batches 326,200 Machine hours 228,00 Number of setups $ 992,789 $ 109,960 Helding hours 228, and Number of inspections 61,950 Rework orders $ 479,750 $ 195,500 Purchase orders 36,82 Number of units 60,429 Number of units $ 226,720 5,102 782 202 Support 518 Purchasing Providing space Providing utilities 4,862 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 1,600 2,200 445 585 2,328 BB 100 345 Model 212 3,280 2,900 445 275 5,488 30 190 173 Required: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs $ 1,680,160 0 per machine hour Machine hours 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $270 for Model 145 and $140 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 $ 0 Model 212 $ 0 Model 145 Model 212 0 3. If the market price for Model 145 is $734 and the market price for Model 212 is $460, determine the profit or loss per unit for each model. Model 145 Model 212 Market price Rafner Manufacturing identified the following budgeted data in its two production departments. Manufacturing overhead costs Direct labor hours Machine hours Assembly $1,257,300 12,600 DLH 6,600 MH Finishing $ 660,000 20,600 DLH 16,600 MH Required: What is the company's assembly department overhead rate using direct labor hours? The departmental overhead rate for Assembly