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 710 8,070 200 Finishing Welding Inspecting Rework Overhead Cost $ 436,650 369,606 368,000 $1,174, 256 $ 305,760 308,425 48,450 $ 662, 635 167,895 30,900 140,100 338,895 Welding hours Number of inspections Rework orders 5,600 845 170 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 533 9,000 9,000 Additional production information concerning its two product lines follows. Model 145 3,000 2,000 355 505 2,750 100 80 355 Model 212 6,000 3,600 355 340 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 5,320 100 90 178 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 $210 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $548.33 and the market price for Model 212 is $306.23, 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 Activity driver Activity Expected Costs Expected Activity Activity Rate incurred $ 436,650 369,606 368,000 710 Number of batches 8,070 Machine hours 200 Setups Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities $ 305,760 308,425 48,450 5,600 Welding hours 845 Inspections 170 Rework orders $ 167,895 533 Purchase orders 9,000 Units 171,000 Total overhead cost 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 $210 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $548.33 and the market price for Model 212 is $306.23, 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 $210 for Model 145 and $112 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 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 $210 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $548.33 and the market price for Model 212 is $306.23, 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 If the market price for Model 145 is $548.33 and the market price for Model 212 is $306.23, 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
