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Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Assembly Finishing Support
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Assembly Finishing Support Activity Machining Setups Budgeted Cost $ 310,800 22,000 $ 332,800 Inspecting $ 226,000 Purchasing $ 136,000 Budgeted Activity Activity Cost Driver Machine hours (MB) Usage 7,800 Setups 120 Inspections 780 Purchase orders 570 Additional production information concerning its two models follows. Units and Activities Units produced Machine hours Inspections Setups Purchase orders. Model X 1,800 Model z 3,600 2,200 5,600 40 80 540 240 380 190 Per Unit Selling price per unit Model X $ 420 Model z Direct materials cost per unit 150 $ 400 100 Direct labor cost per unit 125 150 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit)
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