Question 2

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. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimal places.) Process Activity Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 770 7,600 100 Finishing Welding Inspecting Rework Overhead Cost $ 458,000 300, 400 229,500 $ 987,900 $ 181,900 235,000 60,250 $ 477,150 $ 135,500 31,450 60,310 $ 227,260 Welding hours Number of inspections Rework orders 4,800 760 180 Support 480 Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 5,100 5,100 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 1,700 2,000 385 470 2,300 50 140 320 Model 212 3,400 2,800 385 290 5,300 50 40 160 1. Using a plantwide overhead rate based on machine hours, 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 $280 for Model 145 and $180 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 Model 145 Model 212 3. If the market price for Model 145 is $736 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. Model 145 Model 212 Market price