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Exercise 17-7 Using the plantwide overhead rate to assess prices LO P1 Way Cool produces two different models of air conditioners. The company produces the
Exercise 17-7 Using the plantwide overhead rate to assess prices LO P1 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. (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.) Quantity 790 Process Activity Components Changeover Machining Setups 7,570 80 Finishing Welding Inspecting Rework Overhead Cost Driver $ 458,500 Number of batches 300,200 Machine hours 227,000 Number of setups $ 985, 700 $ 181,800 Welding hours 233,000 Number of inspections 61,650 Rework orders $ 476,450 $ 135,000 Purchase orders 31,650 Number of units 60, 180 Number of units $ 226,830 3,600 815 150 Support Purchasing Providing space Providing utilities 488 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 1,600 395 525 2,320 40 110 325 Model 212 3,400 2,000 395 290 5,250 40 40 163 Required: 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 $250 for Model 145 and $190 for Model 212. Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Overhead Assigned 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 $440, determine the profit or loss per unit for each model. Model 145 Model 212 Market price
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