Exercise 4-9 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. Activity Components Changeover Machining Setups Overhead Cost Driver Quantity Process Number of batches 453,750 750 Machine hours Number of setups 8,380 394,698 110,400 60 $ 958,848 Welding hours Number of inspections Finishing Welding Inspecting Rework 323,760 292,300 37,100 5,700 790 Rework orders 140 653,160 $ 170,850 Purchasing Providing space Providing utilities Purchase orders Support 510 Number of units 30,800 70,180 5,400 5,400 Number of units 271,830 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches 3,600 3,300 1,800 2,400 375 375 Number of inspections 460 330 Machine hours 3,050 5,330 Setups Rework orders 30 30 100 40 Purchase orders 340 170 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 $240 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $744.04 and the market price for Model 212 is $383.95, determine the profit or loss per unit for each model. 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 $240 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $744.04 and the market price for Model 212 is $383.95, determine the profit or loss per unit for each model. Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 decimals places.) Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to Model 145 Model 212 Overhead assigned Activity driver incurred Overhead assigned Activity driver incurred Activity Expected Costs Expected Activity Activity Rate Components 750 Number of batches Changeover S 453,750 Machining 394,698 8.380 Machine hours 110,400 60 Setups Setups Finishing 5,700 Welding hours Welding S 323,760 790 Inspections Inspecting 292,300 37,100 140 Rework orders Rework Support 170,850 510 Purchase orders Purchasing 5.400 Units Providing space and utilities 100,980 Total overhead cost S 0 0 Total units produced Overhead 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 $240 for Model 145 and $112 for Model 212 3. If the market price for Model 145 is $744.04 and the market price for Model 212 is $383.95, 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 $240 for Model 145 and $112 for Model 212. (Round your final answers to 2 decimal places.) Model 212 Model 145 Materials and Labor per unit Overhead cost per unit Total cost per unit Required 1 Required 3 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 $240 for Model 145 and $112 for Model 212, 3. If the market price for Model 145 is $744.04 and the market price for Model 212 is $383.95, 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 $744.04 and the market price for Model 212 is $383.95, 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 Required 2 Required 3
