Exercise 4-8 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 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 870 8.330 180 Pinishing Welding Inspecting Rework Overhead Cost $ 470,000 312.000 228,000 $1,010,000 $ 182,000 229,000 63,500 $ 474,500 $ 139,000 34,000 67,000 $ 240,000 Welding hours Number of inspections Rework orders 5,700 910 130 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 465 5,320 5.320 Additional production information concerning its two product lines follows. Model 145 2,200 Model 212 3.120 4.100 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 435 510 3,050 400 5.280 50 310 155 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 $200 for Model 145 and $190 for Model 212 3. If the market price for Model 145 is $1,550 and the market price for Model 212 is $310, 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.) Components department Finishing department Support department Activity Driver Departmental OH Rate Total Overhead Cost Model 145 Components Finishing Support o 0 Model 212 Activity Driver Departmental OH Rate Total Overhead Cost Components Finishing Support 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 $190 for Model 212. (Round your intermediate calculations and cost per unit 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 $1,550 and the market price for Model 212 is $310, 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 ( Required 2
