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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
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
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. Process Components Activity Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 870 8,370 100 Finishing Welding Inspecting Rework Overhead Cost $ 465,450 389,205 180,500 $1,035,155 $ 201,020 305,625 51,250 $ 557,895 $ 183,595 30, 600 55,800 $ 269,995 Welding hours Number of inspections Rework orders 3,800 815 250 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 503 4,500 4,500 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 1,500 800 435 495 3,050 50 130 335 Model 212 3,000 3,000 435 320 5,320 50 120 168 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 $180 for Model 145 and $111 for Model 212. 3. If the market price for Model 145 is $760.96 and the market price for Model 212 is $442.24, determine the profit or loss per unit for each modelStep by Step Solution
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