Managerial Accounting
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 nishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. Process Activity Overhead Cost Driver Quantity Components Changeover $ 474,000 Number of batches B70 Machining 307,000 Machine hours 8.560 Setups 230,000 Number of setups 220 $1,011,000 Finishing Welding $ 186,000 Welding hours 5,000 Inspecting 224,000 Number of inspections 790 Rework 65,000 Rework orders 170 $ 475,000 Support Purchasing __1357000 Purchase orders 549 Providing space 35,000 Number of units 4,350 Providing utilities 67,000 Number of units 4,850 $ 237,000 [ Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,300 3,050 Welding hours 800 4,200 Batches 435 435 Number of inspections 460 330 Machine hours 3,250 5,310 Setups 110 110 Rework orders 130 40 Purchase orders 366 183 [ 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 $220 for Model 145 and $120 for Model 212. 3. If the market price for Model 145 is $1,850 and the market price for Model 212 is $260, determine the prot or loss per unit for each model. 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 nishing 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 Finishing department Support department Required 2 > 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 $220 for Model 145 and $120 for Model 212. (Round your intermediate calculations and cost per unit answers to 2 decimal places.) ( Required1 Required3 ) If the market price for Model 145 is $1,850 and the market price for Model 212 is $260, determine the prot or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and nal answers to 2 decimal places.) Market price per unit Prot (loss) per unit ( Required 2
