Question
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.
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 $280 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 is $1,100 and the market price for Model 212 is $310, determine the profit or loss per unit for each model.
Process Components Quantity Activity Changeover Machining Setups Driver Number of batches Machine hours Number of setups 8,000 60 Finishing Welding Inspecting Rework Overhead Cost $ 478,000 306,000 234,000 $1,018,000 $ 184,000 233,000 60,500 $ 477,500 $ 139,000 36,000 64,000 $ 239,000 Welding hours Number of inspections Rework orders 820 180 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 465 4,950 4,950 Additional production information concerning its two product lines follows. Model 145 1,900 1,800 455 Model 212 3,050 3,600 455 490 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders mm 2,650 30 130 310 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. (Round your intermediate calculations and per unit cost answers to 2 decimal places.) Show less Components department 0 Finishing department 01 Support department Model 145 Activity Driver Departmental OH Rate Total Overhead Cost Components Finishing Support I I Model 212 Activity Driver Departmental OH Rate Total Overhead Cost Components Finishing Support Required 1 Required 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. (Round your intermediate calculations and cost per unit answers to 2 decimal places.) Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit If the market price for Model 145 is $1,100 and the market price for Model 212 is $310, determine the profit or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) Model 145 Model 212 Market price per unit Cost per unit Profit (loss) per unitStep by Step Solution
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