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	Overhead Cost				Driver	Quantity
Components	Changeover		$	404,250		Number of batches	770
	Machining			372,251		Machine hours	7,870
	Setups			302,400		Number of setups	160
			$	1,078,901
Finishing	Welding		$	277,570		Welding hours	4,100
	Inspecting			284,625		Number of inspections	825
	Rework			59,000		Rework orders	200
			$	621,195
Support	Purchasing		$	199,430		Purchase orders	518
	Providing space			31,600		Number of units	7,800
	Providing utilities			115,820		Number of units	7,800
			$	346,850

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		2,600			5,200
Welding hours		1,000			3,100
Batches		385			385
Number of inspections		475			350
Machine hours		2,550			5,320
Setups		80			80
Rework orders		150			50
Purchase orders		345			173

Required: 1. Using ABC, compute the overhead cost per unit for each product line.

						Model 145		Model 212
Activity	Expected Costs	Expected Activity		Activity Rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Components
Changeover	$404,250	770	Number of batches
Machining	372,251	7,870	Machine hours
Setups	302,400	160	Setups
Finishing
Welding	$277,570	4,100	Welding hours
Inspecting	284,625	825	Inspections
Rework	59,000	200	Rework orders
Support
Purchasing	$199,430	518	Purchase orders
Providing space and utilities	147,420	7,800	Units
					Total overhead cost		$0		$0
					Total units produced
					Overhead cost per unit

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 $112 for Model 212.

	Model 145	Model 212
Materials and Labor per unit
Overhead cost per unit
Total cost per unit

3. If the market price for Model 145 is $579.02 and the market price for Model 212 is $326.89, determine the profit or loss per unit for each model.

	Model 145	Model 212
Price per unit
Cost per unit
Profit (loss) per unit