Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 17-9 Using departmental overhead rates to assess prices LO P2 Way Cool produces two different models of air conditioners. The company produces the mechanical
Exercise 17-9 Using departmental overhead rates to assess prices LO P2 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. Process Activity Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 770 7,840 140 Finishing Welding Inspecting Rework Overhead Cost $ 470,000 306,000 230,000 $1,006,000 $ 186,000 227,000 61,500 $ 474,500 $ 145,000 35,000 65,000 245,000 Welding hours Number of inspections Rework orders 5,800 820 210 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 561 5,020 5,020 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 1,900 2,400 385 500 2,550 70 100 374 Model 212 3,120 3,400 385 320 5,290 70 110 187 Required: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 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 $120 for Model 212. 3. If the market price for Model 145 is $950 and the market price for Model 212 is $320, 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 departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. (Round your intermediate calculations and per unit cost answers to 2 decimal places.) Show less Components department 0 Finishing department 0 Finishing department O Support department Model 145 Activity Driver Departmental OH Rate Total Overhead Cost $ 0 Components Finishing Support $ 0 0 Activity Driver Departmental OH Rate Total Overhead Cost $ 0 Model 212 Components Finishing Support $ 0 0 Required 1 Required 2 Required 3 If the market price for Model 145 is $950 and the market price for Model 212 is $320, determine the profit or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.). Model 145 Model 212 Market price per unit Cost per unit Profit (loss) per unit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started