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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
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 Overhead Cost Driver $ 451,000 Number of batches. Machining 300,800 Machine hours Setups 226,000 Number of setups Quantity 850 7,600 20 $ 977,800 Finishing Welding $181,100 Welding hours 4,600 Inspecting 225,000 Number of inspections 780 Rework 60,500 Rework orders 130 $466,600 Support Purchasing $136,500 Purchase orders 465 Providing space 30,300 Number of units. 4,800 Providing utilities 60,040 Number of units 4,800 $226,840 Additional production information concerning its two product lines follows. Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,600 3,200 Welding hours 2,400 2,200 Batches 425 425 Number of inspections 510 270 Machine hours 2,300 5,300 Setups 10 10 Rework orders 90 40 Purchase orders 310 155 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs Machine hours Oper machine hour 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $210 for Model 145 and $130 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 $ 0 $ 0 Model 145 Model 212 0 3. If the market price for Model 145 is $755 and the market price for Model 212 is $450, determine the profit or loss per unit for each model. Market price Model 145 Model 212
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