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 910 7,720 200 Finishing Welding Inspecting Rework Overhead Cost Driver $ 451,500 Number of batches 300,600 Machine hours 229,500 Number of setups $ 981,600 $ 181,200 Welding hours 224,000 Number of inspections 60,600 Rework orders $ 465,800 $ 135,500 Purchase orders 30,950 Number of units 60, 720 Number of units $ 227,170 5,900 730 250 Support Purchasing Providing space Providing utilities 458 6,000 6,000 Additional production information concerning its two product lines follows. Units produced Welding hours Batches Model 145 2,000 2,600 455 Model 212 4,000 3,300 455 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 2,000 2,600 455 465 2,320 100 160 305 Model 212 4,000 3,300 455 265 5,400 100 90 153 Required: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs $ 1.674,570 $ 216.91 per machine hour Machine hours 7,720 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 $190 for Model 212. Units Produced OH Cost per unit Overhead Assigned Model 145 Model 212 Activity Driver Plantwide OH rate Total Overhead Cost 2,320 $ 216.91 $ 503,231 5,400 $ 216.91 $ 1,171,314 251.62 2,000 $ 4,000 $ 292.83 Total manufacturing cost per unit: Materials and Labor Model 145 250.00 $ Model 212 150.00 $ 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs $ 1.674,570 $ 216.91 per machine hour Machine hours 7,720 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 $190 for Model 212. Overhead Assigned Model 145 Model 212 Activity Driver Plantwide OH rate Total Overhead Cost 2,320 $ 216.91 $ 503,231 5,400 $ 216.91 $ 1,171,314 Units Produced OH Cost per unit 2,000 $ 251.62 4,000 $ 292.83 $ Total manufacturing cost per unit: Materials and Labor Overhead Total manufacturing cost Model 145 250.00 $ 251.62 501.62 $ Model 212 150.00 292.83 442.83 $ 3. If the market price for Model 145 is $754 and the market price for Model 212 is $490, determine the profit or loss per unit for each model. Model 145 Model 212 Market price
