Exercise 17-9 Using ABC to assess prices LO P3 Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their 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 930 8,300 140 Finishing Welding Inspecting Rework Overhead Cost $ 627,750 388,440 261,100 $1,277,290 $ 324, 380 266,175 63,700 $ 654, 255 $ 200,020 30,700 105,380 $ 336,100 Welding hours Number of inspections Rework orders 4,900 845 260 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 548 7,200 7,200 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 2,400 800 465 525 2,950 70 160 365 Model 212 4,800 4,100 465 320 5,350 70 100 183 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 $200 for Model 145 and $117 for Model 212. 3. If the market price for Model 145 is $624.93 and the market price for Model 212 is $377.70, 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 decimals places.) Model 145 Activity driver Overhead incurred assigned Model 212 Activity driver Overhead incurred assigned activity Expected Costs Expected Activity Activity Rate 627,750 388,440 261,100 930 Number of batches 8,300 Machine hours 140 Setups Components Changeover Machining Setups finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 324,380 266,175 63,700 4,900 Welding hours 845 Inspections 260 Rework orders 200,020 136,080 548 Purchase orders 7,200 Units Total overhead cost Total units produced Overhead cost per unit 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 $200 for Model 145 and $117 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 $624.93 and the market price for Model 212 is $377.70, 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
