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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. Process Activity Components Changeover Machining Setups $ Driver Number of batches Machine hours Number of setups Quantity 870 8,240 140 Finishing Welding Inspecting Rework Overhead Cost 517,650 379,864 259,000 $1,156,514 $ 238,500 283,500 42,500 $ 564,500 185,790 31,600 51,650 $ 269,040 Welding hours Number of inspections Rework orders 4,500 810 170 Support $ Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 563 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 1,400 435 460 2,950 70 90 375 Model 212 3,000 3,100 435 350 5,290 70 80 188 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 $220 for Model 145 and $118 for Model 212. 3. If the market price for Model 145 is $843.01 and the market price for Model 212 is $470.58, determine the profit or loss per unit for each model
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