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
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 Overhead Cost Driver Machining Setups $ 564,850 403,884 217,200 Number of batches Machine hours Number of setups Quantity 790 8,630 120 $1,185,934 Finishing Welding $ 318,760 Welding hours 5,200 Inspecting Rework 268,000 Number of inspections 800 56,000 Rework orders 200 $ 642,760 Support Purchasing $ 202,760 Purchase orders 548 Providing space 31,200 Number of units 3,900 Providing utilities 40,950 Number of units 3,900 $ 274,910 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,300 2,600 Welding hours 1,400 3,800 Batches 395 395 Number of inspections 470 330 Machine hours 3,350 5,280 Setups 60 60 Rework orders 70 130 Purchase orders 365 183 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 $190 for Model 145 and $121 for Model 212. 3. If the market price for Model 145 is $936.56 and the market price for Model 212 is $557.41, determine the profit or loss per unit for each model. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If the market price for Model 145 is $936.56 and the market price for Model 212 is $557.41, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.) Price per unit Cost per unit Profit (loss) per unit Model 145 Model 212 < Required 2 Required 3 >
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